Business director admits error in awarding contract

Ted Liu, director of the state business department, admitted yesterday he was wrong to unilaterally award a contract to manage an $8.7 million investment in hydrogen power.

During a state Senate special committee hearing that went on for more than five hours, Liu said he was told later by a state procurement officer that he did not have the power to award the contract and erred in doing so.

"It turns out, according to the procurement officer, we were wrong," Liu told the panel headed by Senate Vice President Donna Kim.

The state Department of Business, Economic Development and Tourism received proposals last year for managing a fund to invest in research, development and testing of renewable energy programs using hydrogen.

The proposals were ranked by an evaluation committee, which listed Kolohala Holdings LLP with a score of 255, Enterprise Honolulu with a score of 243 and H2 Energy LLC with a score of 234.5, according to a Senate resolution in January that authorized the special committee.

Liu said yesterday he gave the contract to H2 based on different criteria.

"I made the final selection of a proposer based on best value to the state," Liu said.

Kim asked Liu if he thought he had the power to award the contract or to approve or disapprove a recommendation from a panel reviewing the proposals.

Liu argued that his assumption was that he could award the contract.

"That assumption was based on my reading of the statue, my reading of the rules and my discussion with the staff," Liu said. But he said he was told on Sept. 25 by a procurement officer, Aaron Fujioka, that his assumption was wrong.

Committee members, according to the resolution, are looking at Liu's actions "to determine whether administrative malfeasance or misfeasance occurred."

Liu denied that he had done anything to steer the selection process, saying that the committee's report calling for the investigation is misguided.

The hearings have been criticized by Gov. Lingle, who said that Kim is prejudiced against Liu and will not give him a fair hearing.

Attorney General Mark Bennett also criticized the hearings, saying that the committee has not followed its own rules.

"The committees' past and continuing violations of the governing statues, the committee's rules and basic concepts of the fundamental fairness reflect very poorly on the committee and on the Senate itself," Bennett said.