Government Suspends BP from Further Contracts

The government is suspending oil giant BP and affiliated companies from further federal contracts, the Environmental Protection Agency announced recently. EPA said in a statement it took the action “due to BP’s lack of business integrity as demonstrated by the company’s conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response.”

BP pleaded guilty Nov. 15 to numerous criminal charges related to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history. The charges included 11 counts of misconduct or neglect of ship officers, one count of obstruction of Congress, one misdemeanor count of a violation of the Clean Water Act, and one misdemeanor count of a violation of the Migratory Bird Treaty Act.

In the government’s investigation into the disaster, EPA was tasked with deciding any suspension and debarment actions. Companies are suspended or debarred from federal contracts by the government to ensure it is conducting business only with “responsible” individuals or companies and not as a punitive step. The suspension will not affect existing federal contracts, but it means that BP and the named affiliates cannot get new government contracts, grants or other covered transactions until the company can prove to EPA that it meets federal business standards.

A suspension may last up to 18 months. To get a suspension lifted, a company often will hire outside firms to help improve the company’s ethics program, its ability to conduct internal investigations, and its ability to communicate with the government. Often a company will submit to the government a plan for improvement and progress reports over several years and, if the plan is accepted by the government, the company will then pay the government to cover costs associated with administering the improvement plan.

In a statement Wednesday, BP said it provided EPA a 100-page argument that it is now a responsible company in order to get the suspension lifted. In that submission, BP detailed steps it took after the oil rig explosion, including launching an internal investigation immediately after the accident, releasing those investigation results, implementing the investigation’s 26 recommendations, making key leadership changes, creating a centralized Safety and Operational Risk organization, and adopting voluntary deepwater drilling standards in the Gulf of Mexico that exceed current regulatory requirements.

BP said it was told by EPA that the agency “is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift this temporary suspension. The EPA notified BP that such a draft agreement would be available soon.”  BP said that since the Deepwater Horizon disaster two and a half years ago, it has been granted more than 50 new leases in the Gulf of Mexico.