BP, Barred from Federal Contracts After Pleading Guilty in Gulf Oil Disaster, Sues U.S.

Friday, August 16, 2013

After pleading guilty last year to polluting the Gulf coast three years ago, BP was banned from bidding on new U.S. government contracts. But now, the oil giant says it has suffered enough financially from its mistakes, and should be allowed to receive new deals from Washington.


To this end, BP this week filed suit in a Texas federal court, where it wants a judge to overturn the U.S. Environmental Protection Agency’s (EPA) decision last November that prevents the corporation from gaining new oil and gas deals with the government.


The EPA move came after BP reached an agreement with the U.S. Department of Justice to plead guilty to criminal charges—including manslaughter and obstruction of justice— and pay $4.5 billion in penalties stemming from the Deepwater Horizon accident in 2010.


At the time of BP’s guilty plea, EPA officials said the company’s role in the disaster demonstrated it had a “lack of business integrity,” and that the suspension would be in force “until the company can provide sufficient evidence to EPA that it meets federal business standards.”


The ban kept BP from bidding on new contracts, including those with the Department of Defense worth as much as $1.9 billion.


Until its 2012 guilty plea, BP continued to do business with the U.S. government since the Deepwater Horizon oil rig blew up on April 20, 2010, killing 11 workers, and dumping millions of barrels of oil into the Gulf of Mexico. As one of the U.S. government’s largest suppliers of fuel, BP currently has $1.34 billion in existing federal contracts. However, its profits have nonetheless taken a hit.


Three years ago, BP’s oil operations in the Gulf produced 338,000 barrels a day. By 2012, production had dropped significantly to 219,000 barrels a day.


In addition to those losses, BP has set aside $42.4 billion in reserve for costs and legal claims stemming from the oil spill.


That’s why the company argues it has done its part, and that the EPA should stop punishing it.


“We believe that the EPA's action here is inappropriate and unjustified as a matter of law and policy, and we are pursuing our right to seek relief in federal court,” BP’s lawyers said in a statement. “At the same time, we remain open to a reasonable settlement with the EPA.”

-Noel Brinkerhoff


To Learn More:

BP Sues U.S. Over Contract Suspensions (by Stanley Reed, New York Times)

Gulf Oil Spill: BP Sues US Government over Federal Contracts (by James Burgess, Christian Science Monitor)

BP Sues U.S. Government over Contract Suspensions after Oil Spill (by Mica Rosenberg, Reuters)

BP, at Trial, Tries to Prove it was Merely “Negligent,” not “Grossly Negligent” (by Noel Brinkerhoff, AllGov)      

BP Contracts with Defense Dept. Surge Since Oil Spill (by Noel Brinkerhoff and David Wallechinsky, AllGov)       

Some Government Contractors are Too Big to be Banned (by Noel Brinkerhoff and David Wallechinsky, AllGov)          


Alice Wyre 5 years ago
No way should BP ever be allowed to bid on lucrative contracts again here in the US. They have proved themselves as an unworthy and unethical business. Talk about some sense of entitlement! Nothing can hold a candle to this kind of disgraceful boldness.

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