EPA slaps BP but punishes the Pentagon

Introduction

The Environmental Protection Agency imposed a new penalty for wrongdoing against the BP oil company on Nov. 28, but it may fall heavily on the Defense Department, an unflaggingly loyal client that has kept buying fuel from BP since the company’s errors caused its well to disgorge nearly 5 million barrels of oil into the Gulf of Mexico in 2010.

The agency’s order temporarily bars new contracting with the oil giant by all federal agencies, although it does not interrupt existing government contracts, including the many large ones it has with the military. It also leaves the door open for BP to prove that it has reformed itself enough to requalify for federal contracts at some point in the future.

But the Pentagon might find itself scrambling if the ban is prolonged, since BP has been the military’s principal single fuel supplier for years and collected billions of dollars for fuel used by U.S. forces in the Middle East and elsewhere, a practice that drew criticism from lawmakers on Capitol Hill and others.

“When someone recklessly crashes a car, their license and keys are taken away,” Rep. Ed Markey (Mass.), the senior Democrat on the Natural Resources committee, said in a prepared statement yesterday. “Suspending BP’s access to contracts with our government is the right thing to do.”

EPA acted two weeks after the corporation entered guilty pleas in federal court to 14 criminal counts, including manslaughter, related to the spill. It was not a speedy decision, however, since EPA employees began considering a contracting ban years ago in response to a BP oil spill in 2006 and a refinery explosion in 2005.

“Do we want to do business with this foreign corporation, which has a horrendous record of chronically violating U.S. law?” former EPA attorney Jeanne Pascal told The Washington Post in 2010. “You have to look at the overall behavior pattern,” said Pascal, who had reviewed BP’s potential debarment from federal contracting even before its oil rig exploded in 2010, because of a spill in 2006 and a refinery explosion in 2005.

Pascal has said the military’s interest in sticking with BP proved an insurmountable obstacle to earlier sanctions. The company providing 10.35 percent of the total amount purchased by the Defense Logistics Agency in fiscal 2011, for example, in contracts worth approximately $1.4 billion. The military’s purchases declined only a bit in fiscal 2012, to $1.1 billion, according to the government’s federal contracting website – apparently reflecting the diminished tempo of US forces in Iraq and Afghanistan.

Michelle McCaskill, the logistics agency spokeswoman, said yesterday that “DLA Energy’s procurements are competitive in nature and DLA anticipates receiving offers from other suppliers to fill future requirements.”

In London, the company noted that it had already turned over a 100-page document supporting its fitness to receive federal contracts. “As BP’s submissions to the EPA have made clear, the company has made significant enhancements since the accident,” including a reorganization and change of leadership, its statement said. A New York-based publicist for the firm said it had no comment about its dealings with the Defense Department.