Joel and Vern,
I really appreciate your comments, they have given me other avenues to ponder. Vern, I will have to request that they look at the price estimates in conjunction with the reasons why the proposals are unacceptable and see what affect those deficiencies have on the price. The purpose of the price evaluation was indeed to determine price reasonableness only.
Joel, Thank you for pointing out the extra step regarding the unbalanced pricing aspect of 15.404-1(g). Even though the total proposal price is fair and reasonable, there should still be an analysis by the KO that the actual or apparent unbalenced contract line items regarding the risk(s).