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EPA Sends a Message With BP Suspension

The federal contracting community is abuzz today with the Environmental Protection Agency’s (EPA) announcement that energy company BP P.L.C. and several of its affiliates have been suspended from federal contracting.

The EPA justified its action citing BP’s “lack of business integrity” as demonstrated by the 2010 Deepwater Horizon disaster. That one incident killed 11 people and caused a massive oil spill in the Gulf of Mexico, for which BP recently pleaded guilty to 14 criminal counts and agreed to pay more than $4.5 billion in penalties. BP still faces civil lawsuits filed by the federal and state governments.

The suspension prevents BP from getting new contracts. It does not affect BP’s existing federal contracts, a point BP makes abundantly clear in its public statement today. The suspension will be lifted when BP can show the EPA that it is responsible and meets federal business standards. In the meantime, the Department of Interior has also disqualified BP from winning new leases to drill for oil or gas on federal land.

As POGO General Counsel Scott Amey said today, “The suspension of BP from future government contracts is surprising but welcome.” POGO has been closely tracking BP’s transgressions for several years on this blog (ever since that memorable “Black Thursday” back in October 2007 when BP racked up 6 misconduct instances in one day) and in our Federal Contractor Misconduct Database. For a long time, we have cynically observed that, as the largest supplier of oil and gas to the U.S. military, BP has become too big to suspend or debar. The press release BP issued two weeks ago to announce the criminal settlement, which stated that the company had “not been advised of the intention of any federal agency to suspend or debar the company,” only bolstered our cynicism.

It will be interesting to see how long the suspension remains in place. The last time the EPA took steps to exclude BP from federal contracting—back in 2009—the agency backed off due to pressure from the Pentagon. BP currently has somewhere in the neighborhood of $1 billion in fuel supply contracts with the Department of Defense. According to BP, it has been diligently working on proving its responsibility to the EPA and assures the public that an administrative agreement resolving the suspension will happen “soon.”

The EPA deserves to be commended for today’s decision. As Scott Amey explained, the BP suspension “sends a message to all government contractors, even large companies, that they will be held accountable if their business practices place taxpayers at risk….This is exactly the strong step the government should take to protect federal agencies, safeguard taxpayers, and establish expectations for responsible contractor behavior.”