DBEDT slapped over purchasing
By Greg Wiles
Advertiser Staff Writer
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A draft report by the state Auditor's Office blasts the state Department of Business, Economic Development and Tourism for sloppy purchasing practices and an "apathetic procurement environment" that resulted in numerous errors.
The report says many problems discovered by auditors weren't individually significant, but taken as a whole illustrate management's lack of emphasis on meeting the state's procurement code.
The auditors recommend DBEDT correct deficiencies to make sure the department's funds are well spent, including an upgrade of its procurement manual and departmentwide training.
Yesterday, DBEDT Director Ted Liu took issue with some of the findings, but said he was taking the report seriously and already was taking steps to rectify the problems.
"It's not a pretty thing," Liu said. "I take the responsibility for this."
He said the department is more clearly emphasizing the procurement code's importance and getting more training, and may get more people to process contracts if some federal energy funding comes through.
The audit was called for by a Legislature resolution last year that said there were concerns about whether the department responsible for Hawai'i's economic development and marketing was complying with state procurement and expenditure laws.
Over the past several years, as some legislators complained about using the nonprofit Pacific and Asian Affairs Council to handle $268,000 in private sponsorships of a state trade mission to China.
More recently, there was a Senate probe that concluded Liu sought to manipulate the procurement and award of an $8.7 million contract to manage an investment fund. The investigation of Liu's handling of the hydrogen fund as been turned over to the Honolulu prosecutor's office.
Among the findings of the audit were:
Liu acknowledged money was shifted to two programs, one relating to an Office of International Affairs and another to establish the Creative Academies, which were supported but not funded by lawmakers.
"We disagreed with that assertion," Liu said, saying his department believes there was clear legislative interest and support for the programs.
Moreover, he said, some of the mistakes were done by people who are competent, ethical and believed they were acting in the best interest of the state.
"I don't think there's been any finding of harm to the state," he said.
Liu also produced a letter from state Procurement Officer Aaron Fujioka, saying the department has increased attendance at procurement training workshops and has been actively seeking the office's advice on purchases.
The report, which was to be issued before the start of the legislative session, comes at a time when lawmakers are looking at possibly splitting DBEDT up by reassigning some of its functions to other state departments.
Reach Greg Wiles at gwiles@honoluluadvertiser.com.
