Understanding Business
Understanding Business
12th Edition
ISBN: 9781259929434
Author: William Nickels
Publisher: McGraw-Hill Education
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4. In January 2014, Buckeye Engineering had grown to a
company with $25-million in sales. The business base
consisted of two contracts with the US Department of
Energy (DOE), one for $15-million and one for $8-million.
The remaining $2-million 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 2009 and
was up for renewal in 2014. DOE had made it clear that
although they were very pleased with the technical
performance of Buckeye, the follow-up 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-up contract with a tentative award
date of October 2014.
On June 21, 2014, the solicitation for proposal was received
by Buckeye. Technical requirements of the proposal request
were not considered to be a problem for Buckeye. There was
no doubt in anyone's mind that on technical merit alone,
Buckeye would win the contract. The more serious problem
was that DOE required a separate section in the proposal on
how Buckeye would manage the $10-million/year project as
well as a complete description of how the project
management system at Buckeye functioned.
When Buckeye won the original bid in 2009, there was no
project management requirement. All projects at Buckeye
were accomplished through the traditional organizational
structure. Line managers acted as project leaders.
In July 2014, Buckeye 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 2nd week in August. In
September 2014, DOE provided Buckeye with a list of
questions concerning its proposal. More than 95% of the
questions involved project management. Buckeye responded
to all questions.
In December 2014, Buckeye received notification that they
would not be granted the contract. DOE stated that they had
no “faith" in the Buckeye project management system.
Buckeye Engineering is no longer in business
a. What was the reason for the loss of the contract?
b. Could it have been averted?
c. Does it seem realistic that proposal evaluation
committees could consider project management
expertise to be as important as technical ability?
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Transcribed Image Text:4. In January 2014, Buckeye Engineering had grown to a company with $25-million in sales. The business base consisted of two contracts with the US Department of Energy (DOE), one for $15-million and one for $8-million. The remaining $2-million 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 2009 and was up for renewal in 2014. DOE had made it clear that although they were very pleased with the technical performance of Buckeye, the follow-up 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-up contract with a tentative award date of October 2014. On June 21, 2014, the solicitation for proposal was received by Buckeye. Technical requirements of the proposal request were not considered to be a problem for Buckeye. There was no doubt in anyone's mind that on technical merit alone, Buckeye would win the contract. The more serious problem was that DOE required a separate section in the proposal on how Buckeye would manage the $10-million/year project as well as a complete description of how the project management system at Buckeye functioned. When Buckeye won the original bid in 2009, there was no project management requirement. All projects at Buckeye were accomplished through the traditional organizational structure. Line managers acted as project leaders. In July 2014, Buckeye 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 2nd week in August. In September 2014, DOE provided Buckeye with a list of questions concerning its proposal. More than 95% of the questions involved project management. Buckeye responded to all questions. In December 2014, Buckeye received notification that they would not be granted the contract. DOE stated that they had no “faith" in the Buckeye project management system. Buckeye Engineering is no longer in business a. What was the reason for the loss of the contract? b. Could it have been averted? c. Does it seem realistic that proposal evaluation committees could consider project management expertise to be as important as technical ability?
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