Last week, city Prosecutor Peter Carlisle closed the book on the state’s mishandling of an $8.7 million hydrogen fund management contract in 2006. His conclusion: There was not enough evidence to file criminal charges based on current law.

If anything, the key figures — the state Department of Business, Economic Development and Tourism and its director, Ted Liu — were guilty of nothing more than incompetence, Carlisle said. Because there was no solid evidence of deliberate intent to violate the rules — “We made a mistake, and we corrected it,” Liu maintains — there’s nothing to prosecute.
Nonetheless, after nearly two years and a lot of expense and effort — a state Senate investigation and the criminal probe — it’s clear the procurement code needs a careful review.
The code is supposed to make the contracting process fair, transparent and legally defensible. But Carlisle pointed out that the law requires the state to seek the “most advantageous” bids, leaving it up to procurement officers like Liu to work out the details through administrative rules. Liu overrode his own evaluation committee and awarded the contract to the lowest-ranked of three bidders.
Advantageous or not, this action was wrong; it deviated from department guidelines, triggered the Senate investigation and resulted in the contract being rescinded and the work redirected to the highest-ranked bidder.
It didn’t help that the state auditor later cited DBEDT for violations of procurement procedures. Cumulatively, these events cast doubt, fairly or not, on DBEDT’s trustworthiness.
That’s unacceptable, especially since DBEDT handles millions of dollars in contracts for Hawai'i’s most important growth industries, high technology and alternative energy.
As Liu correctly points out, many of these leading-edge projects, like the hydrogen fund, take the state into uncharted territory. This makes applying the already complex procurement code even more difficult.
Some policymakers are pushing to simplify and streamline the code to save money and avoid unnecessary delays in awarding contracts. Fair enough.
But there needs to be a sensible balance between efficiency and protecting the public interest — after all, it’s why the procurement code was created.