Under the FAR, unbalanced pricing may increase performance risk and can result in the government paying unreasonably high prices. But the concept of unbalanced pricing is often misunderstood in practice.
As the GAO wrote in a recent bid protest decision, unbalanced pricing doesn’t exist merely because some of an offeror’s line item prices are low. Rather, unbalanced pricing requires both understated and overstated line items–that is, some line items appear too high while others appear too low.