BP banned from doing business with U.S. government

BP has been slapped with a temporary ban on doing business with the U.S. government.

Earlier this month, BP agreed to pay the biggest criminal penalty in history for its role in the 2010 Gulf oil spill. Today BP has been slapped with a ban on doing business with the U.S. government. The ban means BP will not be able to receive government contracts, loans or grants -- at least for a while.

The Environmental Protection Agency (EPA) says it has imposed the ban because the "lack of integrity" BP showed during the Gulf oil spill. The ban, which does not affect existing government contracts, will be lifted once the EPA is satisfied that BP has corrected its failings.

Analysts say the ban, which was acknowledged as a likelihood by BP when it settled it's criminal charges, may not be a huge finanacial blow in the immediate term.

The Department of Defense has one of the largest contracts with BP. Last year the company supplied the Pentagon with more than a billion dollars worth of fuel. Neil Atkinson, an oil expert with DataMonitor, says the Pentagon will be very reluctant to scale back its business with BP.

"The military will have bases of one type or another, which are very conveniently located in relation to BP infrastructure. So I wouldn't expect that the BP military contracts would come under pressure in the short term," he says.

Next year, BP will face a civil suit over the spill which could amount to $21 billion in penalities.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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