The EPA has temporarily suspended BP from entering into new contracts with the federal government due to BP's criminal conduct in the Deepwater Horizon disaster. Existing contracts will not be suspended. The EPA has determined that BP lacks business integrity and BP fails to meet federal business standards. The EPA is requiring BP to show sufficient evidence that it meets federal business standards to get the suspension lifted.
BP continues to be the largest supplier of petroleum products to the U.S. military. This suspension would stop BP from receiving new military contracts if the military does not get a waiver. Despite BP's reckless actions in the Deepwater Horizon disaster, the value of BP's military contracts increased substantially in 2011.
The company in fiscal year 2011 was the Defense Department’s biggest fuel supplier with awards valued at about $1.35 billion. Its contracts with the military surged 33 percent from $1.02 billion in the previous year, according to data compiled by Bloomberg.BP's stock dropped over 1% in London after the announcement, but the U.S. military's demand for oil will continue. The military may request a waiver because it has become dependent on BP's supplies. Moreover, this suspension may have little long-term effect on BP because oil is a commodity sold on world markets. To date the financial penalties are a small percentage of profits which can be treated as a cost of business. Previous penalties have been ineffective at changing BP's culture of recklessness. The disaster in the Gulf was the third major accident that BP was involved in over recent years, not a one of a kind event. In 2009 15 men were killed in a BP refinery explosion in Texas and in 2008 BP had a major pipeline spill in Alaska due to poor maintenance.
The EPA's actions today are significant, but until executives are held personally responsible for criminal actions by BP, there is little reason to expect BP to change its corporate culture. If the deaths of 15 workers in Texas didn't spur BP to improve safety, financial penalties that are a modest percentage of profits cannot be expected to bring change.
Release Date: 11/28/2012
Contact Information: Stacy Kika, email@example.com, 202-564-0906, 202-564-4355
WASHINGTON - The U.S. Environmental Protection Agency (EPA) today announced that it has temporarily suspended BP Exploration and Production, Inc., BP PLC and named affiliated companies (BP) from new contracts with the federal government. EPA is taking this 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, as reflected by the filing of a criminal information. On November 15, 2012, BP agreed to plead guilty to eleven 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, all arising from its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.
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 will temporarily 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.