U.S. Lifts Ban On New Federal Contracts With BP

(RTTNews) - The U.S. government on Thursday decided to lift the ban on British oil giant BP plc (BP.L, BP_UN.TO, BP) from federal government contracts, four years after the Deepwater Horizon rig explosion in April 2010. The decision will enable BP to bid for new contracts that could generate million of dollars of new business for the company.

The Environmental Protection Agency or EPA said it has executed an agreement with BP that settles all suspension and debarment actions against the company that prevented BP from doing business with the U.S. government following the company's guilty plea in the Deepwater Horizon disaster. The administrative agreement will be in place for five years and takes effect immediately.

The explosion at the Deepwater Horizon drilling rig and the rupture of BP's Macondo oil well in the Gulf of Mexico in April 2010 led to the largest accidental marine oil spill in the history of the petroleum industry. The disaster claimed 11 lives and led to an oil spill of about 200 million gallons that impacted beaches and the fishing sector. The well was finally capped on July 15 that year.

The U.S. government had also sued the rig's owner Transocean Ltd. (RIG), and contractor Halliburton Co. (HAL), but legal proceedings led to BP taking the blame for the accident.

BP was temporarily barred in November 2012 from new U.S. government contracts, as federal officials accused the oil producer of lacking business ethics in the wake of the oil spill accident.

Since November 2012, the EPA has suspended 25 BP entities and also disqualified BP Exploration and Production, Inc. from performing federal contract work at its corporate facility in Houston, Texas, stemming from its criminal conviction in the Deepwater Horizon case.

The suspension came just about two weeks after BP agreed to pay nearly $4.5 billion over a span of six years to the U.S. government to settle criminal and securities claims over accident in the Gulf of Mexico.

BP has currently settled criminal proceedings, but spill litigation in the form of a civil trial continues. The company could face fines of about $17 billion, and already has allocated about $43 billion toward cleanup, compensation, and other costs.

In August 2013, media reports indicated that BP filed a lawsuit against the EPA for their continued ban on the company to pick up new government contracts. BP is said to have charged the agency of abusing its discretion in barring the company which has led to it losing out on billions of dollars in new contracts.

Under the terms of the deal with EPA on Thursday, BP is required to retain an independent auditor approved by EPA to conduct an annual review and report on BP's compliance with the agreement. The agreement also contains specific provisions addressing ethics compliance, corporate governance, and process safety.

In addition, the deal provides EPA the authority to take appropriate corrective action in the event the agreement is breached.

Craig Hooks, assistant administrator for EPA's Office of Administration and Resources Management said, "This is a fair agreement that requires BP to improve its practices in order to meet the terms we've outlined together. Many months of discussions and assessments have led up to this point, and I'm confident we've secured strong provisions to protect the integrity of federal procurement programs."

In early March 2014, a U.S. Court of Appeals had turned down a request by BP to stop businesses from recovering money over the Gulf of Mexico oil spill, even if the claimants could not link their economic losses to the incident. BP had requested the court for a permanent injunction preventing certain payments under the Economic and Property Damages Settlement it reached in 2012.

BP closed Thursday's regular trading session at $47.59, down $0.62 or 1.29 percent.