Alrighty, I think a little explanation is in order here in Lorenzo's reasoning and his asshole-ness:
This fight was fixed from the start.
Based upon how everyone was, their background, and how they were raised and their personality, Lorenzo already knew the battle was most likely going to go the way it was going to go because of a few reasons:
1) Zan = Basically a Robot who would follow orders to his grave.
2) Korie would want to go for the Promotion of a squad leader no matter what.
3) Antwon would make a shakey partner due to his past
4) Ian would be a problematic partner for the females of the group, especially considering Korie and their reluctance to reveal their gender.
Based on this, Lorenzo figured there would probably be an all out brawl, multiple teams, or people would want to be the squad leader due to greed and a power struggle as is human nature.
Thus, this 'mock battle' was mostly a test to see if you were all able to overcome your flaws as individuals in order to work together as groups or to avoid a greater conflict... which mostly no one did except Sigma's group.
So, what I'm saying is that you were all doomed to fail from the start, since I set you all up to fail from the start.
This is also how Sigma earned their promotion, because they were the only one who attempted to form a group with others in order to obtain a common goal despite how shaky it was.
In truth, the real reason you all failed was not because you fought or didn't fail, but it was because you all failed to overcome your flaws as individuals. That, was what this 'mock battle' true agenda was about. Drills are not always meant to have a chance of success, and this was one of them. Take this lesson and learn it, because it'll prove invaluable in the upcoming fights.
Lorenzo may be an asshole, but he is no idiot.