U.S. Government Temporarily Suspends New Contracts with BP Citing ‘Lack of Business Integrity’ NOAA

U.S. Government Temporarily Suspends New Contracts with BP Citing ‘Lack of Business Integrity’

EPA announced that it temporarily has suspended BP Exploration and Production Inc., BP PLC and named affiliated companies (BP) from new contracts with the federal government. BP quickly pointed out that the move does not impact its current contracts.

EPA announced Nov. 28 that it temporarily is suspending new contracts with BP and its affiliated companies “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, as reflected by the filing of a criminal information.

On Nov. 15, BP agreed to plead guilty to 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. The charges were brought by the U.S. Department of Justice because of the company’s “conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history,” said a statement from EPA.

Some critics say the move by EPA is like closing the barn door after the fox has stolen the chickens. In the two and a half years since the Deepwater Horizon tragedy, the federal government granted BP more than 50 new leases in the Gulf of Mexico, where the company has been drilling since the federal moratorium on all drilling was lifted. BP is the largest investor and deepwater leaseholder in the Gulf of Mexico with more than 700 gross blocks and seven rigs currently conducting drilling operations.

For the Deepwater Horizon investigation, EPA was designated as the lead agency for suspension and debarment actions. Federal executive branch agencies take these actions to ensure the integrity of federal programs by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case.

The BP suspension temporarily will prevent the company and the named affiliates from getting new federal government contracts, grants or other covered transactions until the company can provide sufficient evidence to EPA demonstrating that it meets Federal business standards. The suspension does not affect existing agreements BP may have with the government.

BP Quick to Respond

BP announced later the same day that the company was “working with EPA to demonstrate ‘present responsibility’ and have temporary suspension lifted.”

According to a statement released by BP, EPA’s action is pursuant to administrative procedures providing for discretionary suspension until a company can demonstrate "present responsibility" to conduct business with the U.S. government.

“BP has been in regular dialogue with the EPA and has already provided both a present responsibility statement of more than 100 pages and supplemental answers to the EPA's questions based on that submission,” the statement noted. “Moreover, in support of BP’s efforts to establish present responsibility, the U.S. Department of Justice agreed, in the plea agreement, that it will advise any appropriate suspension or debarment authority that in the department’s view, BP has accepted criminal responsibility for its conduct relating to the Deepwater Horizon blowout, explosion, oil spill and response.”

BP said EPA is preparing a proposed administrative agreement that, if agreed upon, would effectively resolve and lift the temporary suspension. The EPA notified BP that such a draft agreement would be available soon.

As BP’s submissions to the EPA have made clear, the company has made significant enhancements since the accident. The company launched an internal investigation immediately after the accident and publicly released the results, and has been implementing all 26 of the investigation's recommendations. BP also claims to have “made key leadership changes, reorganized its upstream business, created a centralized safety and operational Risk organization and adopted voluntary deepwater drilling standards in the Gulf of Mexico that exceed current regulatory requirements. “

BP said it has spent more than $14 billion in operational response and clean-up costs and continues to monitor the Gulf and its shoreline, and the company has supported regional tourism, promoted Gulf seafood and committed $1 billion to early restoration projects. To date, BP has paid more than $9 billion to individuals, businesses and government entities and has agreed to a settlement with the Plaintiffs’ Steering Committee, resolving the substantial majority of outstanding private economic loss, property damage and medical claims, which BP estimates will cost approximately $7.8 billion.

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