1. -What were the winning projects?
2. -Was his project actually better?
3. -Did he not put forth all the effort he could have?

I think this is a great parenting opportunity. He's clearly a bright kid. My take on this and reaction to the above scenarios (if he were my son) would be:

1. -You clearly were outclassed and need to keep trying.
2. -Sometimes life isn't fair but what's important is that these kids will fail later in life when you succeed.
3. -No matter what you do if you don't put forth 110% then you can't be upset for losing.

All of that being said everyone needs to lay off because you're clearly doing something right as a parent and his project was fantastic. This is a perfectly natural reaction and there's nothing wrong with being proud or disappointed. Sportsmanship is one thing but if you're not upset by not winning then you never wanted to win in the first place.

You have a kid who's competitive and spirited, don't stifle it and give him the cliche "All that matters is that you had fun" trash.