Case study KOMBS ENGINEERING
In June 1993, Kombs 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 Kombs, 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 Kombs. The
technical requirements of the proposal request were not considered to be a problem for Kombs. There was no question in anyone’s mind that on technical merit
alone, Kombs would win the contract. The more serious problem was that DOE
required a separate section in the proposal on how Kombs would manage the $10
million/year project as well as a complete description of how the project management system at Kombs functioned.
When Kombs won the original bid in 1988, there was no project
management requirement. All projects at Kombs were accomplished through the
traditional or- ganizational structure. Line managers acted as project leaders.
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KOMBS ENGINEERING
In July 1993, Kombs 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 Kombs with a list of questions concerning its proposal. More than 95
percent of the questions involved project management. Kombs responded to all
questions.
In October 1993, Kombs received notification that it would not be granted
the contract. During a post-award conference, DOE stated that they had no
“faith” in the Kombs project management system. Kombs 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?
