The U.S. government has banned BP Plc from taking new federal contracts over its “lack of business integrity” in the 2010 Deepwater Horizon oil spill, Reuters reported.
The suspension, announced by the Environmental Protection Agency (EPA), follows BP’s Nov. 15 agreement with the U.S. government to plead guilty to criminal misconduct in the Gulf of Mexico disaster, and pay $4.5 billion in penalties, including a record $1.256 billion criminal fine.
BP and its affiliates are now also barred from new federal contracts until they demonstrate they can meet federal business standards, according to the EPA. The suspension is “standard practice” and BP’s existing U.S. government contracts are not affected.
The EPA reportedly brought down the suspension hours before a government auction was set to take place. The auction was of offshore tracts in the Gulf of Mexico, a region where BP is the largest investor and lease-holder of deep-water tracts and aims to grow. BP is also the top fuel supplier to the U.S. military, the largest single buyer of oil in the world.
Suspension of contracts could give the government leverage to pressure BP to settle federal and state civil litigation that could top $20 billion if a court finds BP was grossly negligent in the Deepwater Horizon disaster, Reuters reported.
An EPA official told Reuters that government-wide suspensions generally do not exceed 18 months, but can continue longer if there are ongoing legal cases.
In a statement, BP said it has been in “regular dialogue” with the EPA, and that the agency has informed BP that it is preparing an agreement that “would effectively resolve and lift this temporary suspension.” The EPA has notified BP that the draft agreement will be available soon, BP said.