The bitter controversy surrounding the state's $8.7 million hydrogen technology fund has cast an lingering cloud over what should have been a positive development for renewable energy in Hawai'i.

An Aug. 17, 2007, news story by The Advertiser's Sean Hao triggered a state Senate investigation aimed squarely at the Department of Business, Economic Development and Tourism and its director, Ted Liu. The heart of the issue was whether Liu violated the state's procurement laws by awarding a management contract for the fund to the lowest ranked of three finalists, H2 Energy LLC.

An aggressive Senate investigative committee — armed with 13 hearings, 22 witnesses, 56 hours of testimony and 21,000 documents reviewed — concluded that Liu and his top deputies deviated from standard DBEDT procurement practices. The committee also suggested they did so knowingly and intentionally to allow Liu to favor an acquaintance and supporter of Gov. Linda Lingle, a serious aspersion Liu strongly denies.

The committee released its report last month. But this issue is by no means done with. The city prosecutor's office, acting as an independent counsel, is investigating the possibility of criminal wrongdoing. The state Ethics Commission is investigating as well.

Lawmakers last session passed two laws tightening oversight of procurement laws and could consider more actions when they reconvene in January.

But Liu, DBEDT and the Lingle administration shouldn't wait to see how it all plays out. They should take immediate steps, publicly, to strengthen oversight of DBEDT's procurement system, to make it more transparent and to reassure the public and those who do business with the state that the process is fair and entirely above board.

The state's ambitious Clean Energy Initiative — with 70 percent of Hawai'i's energy coming from clean sources by 2030 — depends on the willingness of renewable-energy developers to invest here.

DBEDT plays a key role in bringing them on board; developers must have confidence that their proposals will get a fair and impartial hearing. DBEDT's handling of the hydrogen fund management contract could weaken that confidence.

Liu acknowledges he didn't follow standard procedure. Rather than approve the highest-scoring bidder as determined by his evaluation committee — something he has done regularly in the past — Liu discussed the bids in a single meeting with the committee's members, and then applied his own separate criteria to choose the winner. Liu says he mistakenly believed he had the authority to do so, and corrected the problem when informed of it by the state procurement office administrator, Aaron Fujioka.

But this and other deviations in the handling of the hydrogen fund contract bids, as cited by the Senate committee, suggest that, at the very least, DBEDT officials acted too casually in handling the bidders' proposals.

This and the fact that a year later, the highest-ranked bidder, Kilohana Holdings, is still working through the contract process, is troubling.

The hydrogen fund itself is meant to support companies working to develop clean-burning hydrogen fuel from renewable sources such as wind and water.

Hydrogen is the most abundant gas in the universe and has great potential as a source of clean energy. The state's program to spur investment in this technology is a promising one, but was nearly derailed by the mishandling of the contract.

Whether or not Liu and his team knowingly and deliberately violated the law is a question for investigators.

But public trust in DBEDT's procurement system has been seriously compromised. The Lingle administration and DBEDT must take swift action to restore that trust. About that, there's no question.