LITTLE ROCK — BP PLC, banned from winning new U.S. government contracts for its role in the biggest oil spill in the nation’s history, has military deals with a potential value of more than $2 billion set to expire in the next two years.
The British oil company has at least 11 awards that will be up for competition, said Mimi Schirmacher, a spokesman for the Defense Logistics Agency, which buys most of the Pentagon’s fuel.
The defense agency has no plans to apply for a waiver so it can continue to award contracts to BP, Schirmacher said. The office “anticipates receiving offers from other suppliers to fill future requirements,” Schirmacher said.
While she didn’t say when the contracts would be opened for bidding, agencies typically make big awards months to years before the expiration dates. The existing agreements may be valued at as much as $2.43 billion, according to data compiled by Bloomberg.
The U.S. Environmental Protection Agency on Nov. 28 temporarily banned the London-based company from winning new federal awards because of a “lack of business integrity” in the 2010 Deep- water Horizon well blowout in the Gulf of Mexico. BP on Nov. 15 agreed to plead guilty to criminal charges after the worst oil spill in U.S. history, which killed 11 people.
BP was the Defense Department’s biggest fuel supplier in 2011, the year after the Gulf explosion. That year, it won awards valued at about $1.35 billion, a surge of 33 percent from $1.02 billion in the previous year, according to data compiled by Bloomberg.
The EPA didn’t say how long the ban would be in place, though suspensions generally last for fewer than 18 months or until the end of legal proceedings. BP and the government are still in a dispute over civil charges.
The temporary ban doesn’t affect existing contracts. BP won 22 contracts from the Defense Logistics Agency in fiscal 2011, Schirmacher said.
Among the companies that might benefit from BP’s suspension are San Antonio, Texasbased Valero Energy Corp.; San Ramon, Calif.-based Chevron Corp.; and the Hague, Netherlands-based Royal Dutch Shell PLC. The firms are top suppliers to the U.S. military, the world’s single largest consumer of energy, excluding countries.
BP received 49 percent more in defense contracts in that year than the No. 2 fuel supplier, Valero Energy. The third-largest recipient of the contracts was Kuwait National Petroleum Co., followed by Shell, Miami-based World Fuel Services Corp. and Chevron.
The company on Nov. 15 reached a settlement with the Justice Department, agreeing to pay $4.5 billion to end all criminal charges and resolve securities claims relating to the Gulf explosion. At the time, the company said it hadn’t been advised of any U.S. action on contracts.
BP produces about 770,000 barrels of oil equivalent a day in the U.S., more than 20 percent of the company’s global output. The company had revenue of $131 billion in U.S. last year, more than a third of its global total.
Business, Pages 29 on 12/01/2012