Discounted grocery shopping, one of the military’s most prized benefits, costs taxpayers $1.2 billion a year. For that, a military family of four saves $2,700 a year, according to the Defense Commissary Agency (DeCA).

Senior defense officials see two problems with the benefit, however, that they believe a shift to “variable pricing’’ might ease.

One, they believe the $1.2 billion subsidy is too high. Two, the savings realized by shoppers vary depending on a base’s location and other factors. Variable pricing, proponents argue, could make stores more efficient and deliver more consistent savings.

Rep. John McHugh (R-N.Y.) isn’t buying it. He fears variable pricing is a device to raise overall prices for commissary patrons, which over time could endanger the benefit. MOAA and other service associations agree.

That’s why McHugh, chairman of the Total Force Subcommittee of the House Armed Services Committee, which oversees commissary operations, intends to oppose variable pricing if, as expected, the Bush administration seeks permission from Congress later this year to test the concept.

Items on commissary shelves now are sold at cost—the price DeCA pays the manufacturer—plus a 5 percent surcharge. The surcharge money is used to renovate and replace aging stores. If variable pricing replaces “cost-plus-5-percent,’’ management would have more flexibility in selling items above or below cost.

Arkansas Rep. Vic Snyder, the subcommittee’s ranking Democrat, joined McHugh to urge defense officials to drop a plan to conduct a variable pricing feasibility study, estimated to cost more than $500,000. The Commissary Operating Board, chaired by a star-rank official, also opposed the study, saying no new useful information would result.

Nevertheless, in January, DoD officials directed a team of outside consultants to conduct the study.

“Either we didn’t make our case clear enough or DoD thought that whatever the study showed would be so compelling that we would be disabused of our notions after the fact,” said McHugh.

That’s not likely to happen, he said.

“The clear danger of variable pricing is that where you charge less [for some items], you’re inclined in other areas to charge more. And if what you’re trying to do is find justification to cut appropriations to commissaries, you use it as a means to increase revenues,” said McHugh.

Defense officials, providing written responses to questions, said if the study finds “variable pricing won’t work in commissaries, we won’t pursue it.”

The DoD also for the first time is referring to “promised savings’’ of 30 percent for commissary shoppers over commercial grocers. Average savings now are 32 percent. The difference leaves critics of variable pricing suspicious that the DoD intends to convert any savings over 30 percent into revenues via higher prices. The money, rather than staying in shoppers’ pockets, could reduce the $1.2 billion subsidy.

If the study endorses variable pricing, DoD would ask Congress for money and authority to test the concept, possibly by FY 2006.

McHugh said the full House Armed Services Committee will oppose any initiative that would raise commissary prices or cut the commissary subsidy.

Variable pricing, he said, also threatens to change the commissary shopping experience. With cost-plus-5-percent abandoned, patrons could lose confidence in savings realized on base and comparison shop more often off base. Gradually, McHugh said, the benefit would lose value.

Defense officials concede they want to lower the subsidy, but they contend variable pricing could create a “better commissary benefit.’’

“Although average savings in the United States are 32 percent, some customers save over 50 percent while others save less than 20 percent. We are interested in determining the feasibility of using variable pricing to more evenly distribute savings to all commissary shoppers,’’ officials said.

Still, the study will have to be persuasive indeed not to be seen as a waste of tax dollars. In January, DeCA’s own newsletter for employees said agency leaders had reviewed variable pricing and concluded it “would fundamentally alter the benefit, fundamentally alter our relationships with our business partners, and would not be a prudent action to take.’’

Tom Philpott is a freelance writer and syndicated news columnist. His column, "Military Update," appears in 48 daily newspapers throughout the United States and overseas.