What is the term used when the overall price appears reasonable but cost or price analysis indicates certain line items are significantly over or understated?

The term that describes a situation where the overall price seems reasonable, but a detailed cost or price analysis reveals that specific line items are either significantly over or understated is known as unbalanced pricing. This concept is important in contracting because it can indicate that a contractor may be attempting to manipulate the pricing structure to their advantage.

In unbalanced pricing, a contractor might deliberately inflate the cost of certain items while keeping others low to win a contract bid. While the total bid amount appears to be within a reasonable range, the analysis of individual line items reveals discrepancies that could lead to future cost overruns or lack of adequate performance on specific deliverables. Identifying unbalanced pricing is crucial for ensuring that contracts are fair, equitable, and that they reflect true value, supporting effective financial management and accountability in contracting processes.

Understanding unbalanced pricing allows contracting officers to make informed decisions about contract award and management, ensuring that all line items are cost-effective and that the overall agreement protects the interests of the government or organization.