The Department of Business, Economic Development & Tourism and its director, Ted Liu, were told by the State Procurement Office to award a contract by the end of the month to manage an $8.7 million technology investment fund.

While the decision appears to be a final ruling by the procurement office, it may not be an end to the months of back-and-forth discussions between the office and DBEDT and Liu on how the contract should be awarded.

Liu yesterday issued a statement indicating he doesn't consider the matter over.

"I do not agree with the conclusions of the state procurement office," Liu said in the statement. "There are factual matters that need to be clarified. I hope to have a continuing dialogue with the SPO."

The fund was created by lawmakers in 2006 to help finance companies working to develop clean-burning hydrogen fuel from renewable resources such as wind and water. The money can be used to provide seed capital and investments in projects for research, development, testing and implementation of the hydrogen energy as part of the state's drive to develop renewable energy resources.

But the launch of the fund has been held up by the dispute between DBEDT and the procurement office on awarding the contract to manage the fund.

In September the office ruled DBEDT erred when it awarded the contract to the third-ranked bidder, H2 Energy LLC.

The office said the fund contract should go to the bidder who submitted the highest-ranked proposal, Kolohala Holdings LLP.

Since then DBEDT has argued that its own evaluation committee may have incorrectly ranked Kolohala as the top bidder and that committee members had assumed their ranking of bidders was only a recommendation and not a selection of who should get the contract.

DBEDT director Liu also argued to the procurement office late last month that the state's request for proposals on the energy fund could be canceled because of a clean energy partnership with the U.S. Department of Energy.

A Liu memo to the office contended the Energy Department partnership would fulfill the state's interest as intended in the call for proposals. Liu also noted the investment fund could be split, with a fund manager only overseeing $2.7 million of the $8.7 million.

But Procurement Office Administrator Aaron Fujioka sent a memo back to Liu on Thursday noting the partnership with the U.S. Department of Energy is a non-binding agreement and that there was no guarantee the partnership would fulfill the law calling for the creation of hydrogen program and the investment fund.

He said the request for proposals could not be canceled and that the fund could not be split up.

Fujioka ended his five-page memo to Liu saying DBEDT shall award the contract by Feb. 29.

Yesterday Liu testified against Hawai'i Senate Bill 146 that proposed repealing the hydrogen investment capital fund.

"Nothing has changed in terms of the state interest in developing the elements of the renewable hydrogen program," Liu said in his prepared testimony.

"What has changed is that the hydrogen fund is already working, fulfilling its purpose in drawing capital and interest and investment in helping solve Hawai'i's energy security and self-sufficiency challenges."

Liu noted the issues with the request for proposals were being worked out.

Also yesterday, Kolohala Holdings, said it remained committed to investing in renewable energy technologies in Hawai'i.

"We welcome the State Procurement Office's ruling regarding the awarding of the State Hydrogen Fund and look forward to working closely with the state to realize our shared vision of an energy independent Hawai'i," the company said.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.