CASE STUDY 1 : ACE ENGINEERING : 5marks In June 1993, Ace Engineering had grown to a company with $25 million in sales. The business base consisted of two contracts with the U.S. Department of Energy (DOE), one for $15 million and one for $8 million. The remaining $2 mil lion consisted of a variety of smaller jobs for $15,000 to $50,000 each. The larger contract with DOE was a five-year contract for $15 million per year. The contract was awarded in 1988 and was up for renewal in 1993. DOE had made it clear that, although they were very pleased with the technical performance of Ace, the follow-on contract must go through competitive bidding by law. Marketing intelligence indicated that DOE intended to spend $10 million per year for five years on the follow-on contract with a tentative award date of October 1993. On June 21, 1993, the solicitation for proposal was received at Ace. The technical requirements of the proposal request were not considered to be a problem for Ace. There was no question in anyones mind that on technical merit alone, Ace would win the contract. The more serious problem was that DOE required a separate section in the proposal on how Ace would manage the $10 million/year project as well as a complete description of how the project management system at Ace functioned. When Ace won the original bid in 1988, there was no project management requirement. All projects at Ace were accomplished through the traditional organizational structure. Line managers acted as project leaders. In July 1993, Ace hired a consultant to train the entire organization in project management. The consultant also worked closely with the proposal team in responding to the DOE project management requirements. The proposal was submitted to DOE during the second week of August. In September 1993, DOE provided Ace with a list of questions concerning its proposal. More than 95 percent of the questions involved project management. Ace responded to all questions. In October 1993, Ace received notification that it would not be granted the contract. During a post-award conference, DOE stated that they had no faith in the Ace project management system. Ace Engineering is no longer in business. QUESTIONS 1. What was the reason for the loss of the contract? 2. Could it have been averted? 3. Does it seem realistic that proposal evaluation committees could consider project management expertise to be as important as technical ability?