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The price was reasonable given the average quotes received by similar entities and the prices on the market, but it was absurd when considering the service provided. Perhaps I didn't make that point clear, and I'll likely modify it slightly. The concept is that the price, which was initially acceptable to them, was in fact absurd when viewed in terms of what was being provided.

Side question: If you and your co-workers (across multiple government agencies) had strong suspicion that the vendor had a backdoor to spying on your emails why wasn't the obvious choice contacting federal law enforcement? I'm not sure what it is like in the EU, but in the US I'm pretty sure that if something like this was discovered at a government agency that vendor would quickly find their office raided by FBI agents.
Ah, that makes sense. I would update it to say something like "the price was competitive with the generally overpriced market."
I've modified this sentence, I hope it's clearer now:

They had already received a proposal - expensive but, when compared to similar offers made to other organizations, apparently reasonable — for a managed service hosted by an external provider and based on an open source mail stack. The company offered a managed version with its own proprietary additions and enterprise support.

The catch? While such pricing had become almost "normal" in the market, it was still wildly inflated considering what was actually being delivered. Agency A already had solid infrastructure - reputable IP classes, redundant datacenters, everything running smoothly. We had built and maintained that environment for years, and it was still performing perfectly.

Perfect! Exchanges like this are why the internet is still a great place.
Thank you, agree this is much better!
PS: thank you for your suggestion!

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