BP Banned From New US Government Contracts

BP Banned From New US Government Contracts

The US Environmental Protection Agency has suspended BP from new government contracts as three BP employees deny criminal charges.

The temporary ban stemmed from the British oil giant's conduct in the blowout at its Deepwater Horizon rig, which killed 11 workers in April 2010.

Meanwhile two BP rig supervisors and a former BP executive pleaded not guilty to criminal charges. BP well site leaders Robert Kaluza and Donald Vidrine are charged with manslaughter in the deaths of 11 rig workers and accused of disregarding abnormally high pressure readings.

BP's vice president of exploration for the Gulf David Rainey was charged separately with concealing information from Congress about the amount of oil that was leaking from the well. All three have been released on bail.

It comes after the company has agreed to plead guilty to charges over its part in the largest environmental disaster in US history, and to admit lying to Congress about the amount of oil that was spilling from the Macondo well.

"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," the agency said.

"Suspensions are a standard practice when a responsibility question is raised by action in a criminal case."

The move prevents BP from getting new government contracts or grants "until the company can provide sufficient evidence to EPA demonstrating that it meets federal business standards," EPA added.

Existing agreements between the company and the government are not affected.

BP said it had made "significant enhancements" since the accident, including at its safety and risk operations, upstream business and drilling standards.

The company said it was working with EPA to demonstrate "present responsibility" and have the temporary suspension lifted.

"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," it said in a statement.

The agency has informed BP that it is preparing an agreement that "would effectively resolve and lift this temporary suspension", the statement said.

Professor Joe Lampel from Cass Business School said EPA's decision dealt a blow to BP.

"The ban comes at the end of a complex process during which BP has settled most of the claims against it," he said.

"Therefore this suspension should be seen as an additional penalty rather than a pressure tactic that the US government often uses when it wants to force firms to concede liability."

He said the ban would most probably be lifted after a sufficient grace period has passed.

"BP has been working hard to repair its reputation and I suspect that it will do whatever it takes to satisfy regulators that it now meets all the necessary standards," he added.

At the end of last month, BP revealed the disaster had cost it more than \$38bn (£23.7bn) to date.