BP’s November 2012 settlement of the federal criminal charges stemming from the Deepwater Horizon spill left some important issues unresolved. It left open claims for billions in civil penalties and natural resource damages, which go to trial on February 25, 2013. And even though the Gulf of Mexico spill had no connection to BP’s government contracts, the criminal settlement led to BP’s formal suspension [pdf] from federal contracting. The suspension means that BP will be unable to obtain new oil supply or lease contracts with the United States government until the EPA Suspension and Debarment Official finds it to be “presently responsible.”
BP is by no means the only company to have been suspended or debarred as a result of environmental violations. EPA has authority to suspend or debar companies for violating the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, and the Resource Conservation and Recovery Act. Indeed it is common for the EPA to seek suspension or debarment in environmental crimes cases. A company convicted of violating the Clean Air Act or Clean Water Act may even be automatically suspended or debarred. Although such a mandatory suspension or debarment applies only to the facility where the violation occurred, EPA can expand the sanction to the entire company. That is precisely the approach that EPA took with BP after the Deepwater Horizon spill.
From the government contractor’s perspective, there are two aspects of the BP suspension that should not be ignored. First, the case shows that federal contractors can be suspended or debarred for wrongdoing that has no connection to their government contracts. The legal standard requires only that the agency identify conduct that raises serious questions about the contractor’s “present responsibility.” There is no requirement that wrongdoing identified as the basis for suspension or debarment relate to the performance of a government contract.
Second, the BP case shows addressing a potential suspension or debarment requires much more than defending criminal or civil charges brought by the Justice Department. The Justice Department has no authority to resolve suspension or debarment issues. Indeed, Federal Suspension and Debarment Officials expect that a responsible federal contractor will come to them directly and promptly whenever circumstances raise question about their present responsibility. Rather than waiting for the SDO’s demand, a contractor should initiate an open dialogue with the SDO and show the affirmative steps it has taken to demonstrate its present responsibility and to protect the Government’s interests.