City Prosecutor Peter Carlisle yesterday said his office will not file misdemeanor criminal charges related to the state's bungled award of an $8.7 million energy fund management contract in 2006.

A state Senate committee investigated the award after The Advertiser revealed that Ted Liu, director of the state Department of Business, Economic Development and Tourism, had awarded the contract to a company that was ranked third among qualified bidders.

State Auditor Marion Higa later released a scathing audit of DBEDT's purchasing practices, finding widespread violations of the state's procurement code, lack of staff training and an "apathetic procurement environment."

Questions about how Liu tried to award the hydrogen fund management contract were referred to the attorney general's office, which in turn forwarded the matter to Carlisle's office for investigation.

Carlisle said his office investigated the matter extensively and found plenty of evidence of "incompetence" in DBEDT's procurement practices but no evidence that form the basis of criminal charges as the law is currently written.

At most, he said, a violation of the procurement law is a misdemeanor offense, punishable by up to a year in prison.

Liu overrode a technical evaluation committee's findings that recommended the fund management contract be awarded to a firm called Kolohala Holdings LLP and instead selected a firm ranked third among bidders, H2 Energy LLC.

A special state Senate investigating committee, headed by Sen. Donna Kim, D-14th (Halawa, Moanalua, Kamehameha Heights), conducted 13 hearings on the contract award, amassing nearly 60 hours of testimony and more than 21,000 pages of records.

Carlisle said his office reviewed 25 DVDs of committee testimony, 29,700 pages of documents and interviewed various officials at length, including state chief procurement officer Aaron Fujioka, auditor Higa and DBEDT official Ken Kitamura.

A senior deputy prosecutor assisted by an investigator and paralegals spent 162 days reviewing the case, Carlisle said.

Kim said she was briefed by Carlisle on the matter Tuesday.

"I'm not all that surprised," the senator said yesterday. "When I met with him yesterday, he said the language of the law needed to be changed."

Carlisle said yesterday that procurement laws and regulations could be toughened, but that it was not his job to make that recommendation.

Kim, however, said that when she asked Carlisle to suggest language tightening up procurement rules and laws, he agreed to do so.

Carlisle said later yesterday that he would make suggestions to Kim about possible changes to purchasing laws and rules.

Liu of DBEDT said yesterday afternoon, "I'm grateful that a thorough and impartial review resulted in the conclusion that no probable cause that a crime was committed."

"The findings confirm what we have stated from the very beginning: I made a mistake, an unintentional mistake," Liu continued.

The contract award to H2 Energy was rescinded and last September the work was given to Kolohala Holdings.