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For sauce, bring water to boiling in a medium saucepan . Add onion, garlic and chili powder. Reduce heat. Simmer, covered, for 5 minutes or until tender. Stir in tomato sauce, vinegar, honey, salt and pepper. Return to boiling, stirring constantly. Boil for 5 minutes or until slightly thickened.
Meanwhile, trim fat from meat. Score both sides of steak in a diamond pattern by making shallow diagonal cuts at 1-inch intervals. Brush lightly with some of the sauce. For a charcoal grill, place steak on the rack of an uncovered grill directly over medium coals. Grill for 17 to 21 minutes or until medium doneness (160°F), turning once halfway through grilling and brushing with the sauce during the last 5 minutes of grilling. (For a gas grill, preheat grill. Reduce heat to medium. Place steaks on grill rack over heat. Cover and grill as above.)
In a small saucepan, reheat the remaining sauce until bubbly. To serve, thinly slice steak across grain. Pass warmed sauce.