In June $2013,$ EHS Engineering had grown from just a few employees to a company with $$250$ million in

sales. The business base consisted of two contracts with the U$.$S$.$ Department of Energy $($DOE$),$ one for

$$150$ million and one for $$80$ million. The remaining $$20$ million consisted of a variety of smaller jobs for

$$150,000$ to $$500,000$ each. EHS expected the growth in smaller jobs to exceed $$100$ million in a few

years.

The larger contract with DOE was a five$-$year contract for $$150$ million per year. The contract was

awarded in $2008$ and was up for renewal in $2013.$ DOE had made it clear that, although it was very

pleased with the technical performance of EHS, the follow$-$on contract must go through competitive

bidding by law. Marketing intelligence indicated that DOE intended to spend $$100$ million per year for

five years on the follow$-$on contract with a tentative award date of October $2013.$ On June $21,2013,$ the

solicitation for proposal was received at EHS. The technical requirements of the proposal request were

not considered to be a problem for EHS. There was no question in anyone's mind that on technical

merit alone, EHS would win the contract. The more serious problem was that DOE required a separate

section in the proposal on how EHS would manage the $$100$ million$/$year project as well as a complete

description of how the project management system at EHS functioned.

When EHS won the original bid in $2008,$ there was no project management requirement. All projects at

EHS were accomplished through the traditional organizational structure. Line managers acted as project

leaders.

In July $2013,$ EHS 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

$2013,$ DOE provided EHS with a list of questions concerning its proposal. More than $95$ percent of the

questions involved project management. EHS responded to all, questions.

In October $2013,$ EHS received notification that it would not be granted the contract. During a post$-$

award conference, DOE stated that it had no "faith" in the EHS project management system. EHS

Engineering is no longer in business.

QUESTIONS

What was the reason for the loss of the contract?

Could it have been averted?

Does it seem realistic that proposal evaluation committees could consider project management

expertise to be as important as technical ability?