well, they probably thought that making a new engine wouldn't be worth it - Bioware only makes a game every 2 years so it won't cut their costs. Also, UE3 is a licensing-monster and there's the superior Crysis Engine 2... maybe it won't do Bioware much good by trying to go head-to-head against those two.
The fact that development costs of an engine probably increased sharply doesn't help.