The U.S. Environmental Protection Agency (EPA) announced today that it has suspended BP from the U.S. procurement system. The EPA explained that it did so because of BP’s “lack of business integrity” relating to the Deepwater Horizon oil spill.
As I have explained in previous posts on the FCPA Blog, suspensions are temporary measures designed to protect the Government from imminent harm.
Because suspensions are prospective in nature, BP’s current contracts will not be impacted by this administrative action. That said, the consequences of a suspension (or debarment) can be devastating depending on the length of the exclusion.
A company is not only excluded from future government contracts and subcontracts, it is also rendered ineligible for, among other things, federal grants, loans, and subsidies. As the top supplier of “jet fuel and other refined products to the U.S. military,” BP will undoubtedly feel the impact of this exclusion.
BP will remain suspended until it can demonstrate that it is “presently responsible.” BP has released a statement explaining that it has been in “regular dialogue” with the EPA, and that they will soon enter into an agreement that “would effectively resolve and lift this temporary suspension.”
BP is likely referring to an administrative compliance agreement — a tool that requires companies to undertake significant compliance obligations, such as revising and enhancing their internal compliance systems, retaining an independent compliance monitor, conducting ethics and compliance training for employees, and continued cooperation with the government. The Air Force entered into a similar agreement with Booz Allen (available in pdf here) after suspending its San Antonio office.
Jessica Tillipman is a Senior Editor of the FCPA Blog.