This paper presents the methodology and the results of a study which assessed the output of local engineering education systems for an economy in transition. The paper considers the case of engineering education in the Palestinian Territories, which are evolving towards becoming an independent entity. The assessment was performed from the viewpoint of private sector customers in order to examine to what degree local engineering education programs were meeting their expectations. The approach investigated the areas of strengths and weaknesses of the local universities' engineering graduates compared to their counterparts in universities abroad. The results indicated that local university graduates possessed overall competence and were strong in many aspects, such as theoretical and analytical abilities and computing skills. However, there were weaknesses in their applied skills and practical training, technical writing and scientific research capabilities, and English language skills. The results were utilized to establish the outcomes that engineers should achieve. One recommendation is modifying the curricula by accommodating specific topics and courses and enhancing the students' abilities and skills that are identified as needing to be upgraded. Another recommendation is increasing the interaction between the private sector and the universities and establishing university±industry partnership programs.