What term describes a situation where the overall price seems reasonable but specific line items are significantly over or understated?

The term that describes a situation where the overall price appears reasonable, but specific line items are significantly over or understated is known as Unbalanced Pricing. This concept underlines a pricing strategy where individual components of a contract may not reflect their true costs or market value, leading to potential risks in contract performance and financial equity.

Unbalanced pricing can be a concern for contracting officers and procurement professionals because it may indicate an intentional attempt to manipulate budgets or allocate risks disproportionately among line items. In this scenario, while the total contract price may seem fair and within the expected range, the discrepancies in individual line items could lead to issues like cost overruns, disputes during execution, or failure to deliver on specified terms.

This type of pricing requires careful review and consideration beyond the cumulative total, ensuring that all line items are substantiated and aligned with fair market rates. Recognizing unbalanced pricing helps maintain integrity and accountability in the procurement process, safeguarding against unforeseen financial challenges and fostering healthy contractor relationships.