Hydrogen fund stalled by contract controversy

A firm awarded the project had scored the lowest in a review

A recently awarded contract to manage the state's $10 million hydrogen investment special fund has been put on hold while the process by which the contract was awarded is being reviewed.

The awarding of the contract last month to the consortium H2 Energy was the subject of a four-hour hearing yesterday before the Senate Tourism and Government Operations Committee.

The decision has been criticized after it was learned that H2 Energy had the lowest score among three finalists reviewed for the contract by an evaluation committee. The other bidders were Kolohala Holdings LLP, which was rated highest by the evaluation committee, and Enterprise Honolulu.

Ted Liu, who as director of the state Department of Business, Economic Development of Tourism had final approval of the contract, said he has asked the Attorney General's Office to review his interpretation of the state's procurement law.

"Should my department's interpretation be found to be incorrect, we will take immediate corrective action," Liu told lawmakers. "Meanwhile, the department is doing no work to proceed with the awardee (of the contract)."

Liu said he was unaware of the scores when he made the decision and he based his selection after a lengthy meeting with committee members, who did not make the scores available and did not make a recommendation.

"I made the selection based on best value to the state, taking into consideration price and the evaluation criteria," Liu said.

Committee Vice Chairwoman Donna Kim (D, Kalihi Valley-Halawa) said she was more concerned as to whether the law was followed.

"I'm questioning the process by which it was done," she said.

State Procurement Officer Aaron Fujioka said a preliminary review indicated that Liu's action may have been inconsistent with the law.

Unless the evaluation committee was found to have acted wrongly, the highest-scored proposal should have been selected, Fujioka said.

Fujioka said his office was continuing to review information in the case and reserved comment on whether any corrective action should be taken. He said he also is awaiting the attorney general's review of the procurement law.

The special fund was created in 2006 with the goal of providing investment capital for projects to develop hydrogen fuel in Hawaii.