This is unfortunate however it is common. DEFCON still had the right to terminate and try to salvage what they did by sending their own team. EE got in over their head.
Contractual terms and timeline should have been better. Starting this in January was probably too late. Badge issues have been common in past years.
It is quite common for a big entity to act shitty towards smaller makers. So *if* this is the case, DEFCON are the bad guys, no matter how common it is.