BP Still Being Awarded Lucrative Government Contracts

By Jason Leopold , TruthOut.org
Posted on on May 3, 2011

BP continues to receive tens of millions of dollars in government contracts, despite the fact that the British oil company is under federal criminal investigation over the disaster in the Gulf of Mexico and twice violated its probation late last year.

Last week, the Defense Logistics Agency awarded Air BP, a division of BP Products North America, a $42 million contract to supply fuel to Dover Air Force Base for the next month and a half. BP is the biggest supplier of fuel to the Defense Department.

What makes this particular contract unique is that it is one identified as “an unusual and compelling urgency” contract, which means the government would be “seriously injured“and national security could be at risk unless the Defense Logistics Agency was permitted to “limit the number of sources from which it solicits bids or proposals.”

The Defense Logistics Agency sent out a request for proposals on March 25 and set a deadline of April 1 for offers to be returned. Included in the government’s proposal is a purchase request for 20 million gallons of jet fuel at an average price of $2.10 a gallon.

According to government contracting regulations, “an unusual and compelling urgency precludes full and open competition” and “delay in award of a contract would result in serious injury, financial or other, to the Government.”

Scott Amey, general counsel for watchdog group Project On Government Oversight (POGO), said, “unusual and compelling urgency” is often used by the government when it awards a no-bid, sole source contract.

“It’s just another way of getting around competitive bidding,” Amey said in an interview. “The military needs to justify why there was little or no competition.”

Michelle McCaskill, a spokeswoman for the Defense Logistics Agency, told Truthout a copy of the justification for “the unusual and compelling urgency” would be posted online within 30 days after the contract award.

She added that the contract awarded to Air BP “was needed to meet requirements at Dover [Air Force Base] during the period of April 15, 2011 – May 31, 2011.”

McCaskill could not obtain a timely response to questions about whether the Defense Logistics Agency received bids from other companies.

[UPDATE: On Thursday morning, McCaskill sent an email to Truthout stating the Defense Logistics Agency did receive bids for the “unusual and compelling” contract from other oil companies. Moreover, McCaskill said the fuel contract awarded to Air BP “is the third supplemental solicitation tied to the terms and conditions of the basic solicitation.” In other words, the contract awarded to Air BP last week is part of a larger fuel contract the Defense Logistics Agency awarded to several oil companies last year. The contract given to Air BP supplemented the original contract by allowing the Defense Logistics Agency to purchase additional fuel. The agency supplemented the original contract twice before, most recently in February when it issued a requests for proposals to three oil companies, which included Air BP and Tesoro Refining and Marketing Company, seeking 14 million gallons of fuel to “provide support for ongoing operations on” Dover Air Force Base for about a month. That contract, also identified as “unusal and compelling,” was awarded to ExxonMobil for $30.8 million, a bid that was more than $100,000 less than Air BP’s. It is unknown what mission the contract awarded to ExxonMobil in February supported as that information is redacted in documents released to justify the “unusual and compelling” contract.]

BP won the most recent contract even though the company’s federal probation officer petitioned a US district court judge last November to revoke the company’s probation over a 46,000 gallon oil spill that occurred at BP’s Lisburne facility on Alaska’s North Slope in November 2009.

The probation officer, Mary Frances Barnes, said in court documents that the spill amounted to “criminal negligence” under Alaska state law and the federal Clean Water Act and violated the terms of the probation agreement BP signed in November 2007 following a 212,000 gallon oil spill on the North Slope a year earlier. BP has pleaded not guilty to the probation violation charge and is fighting the case in federal court.

Furthermore, last September, BP was found to have violated the terms of a settlement agreement it entered into with government regulators six years ago to make certain safety upgrades at its Texas City refinery, where an explosion in March 2005 killed 15 people and maimed and seriously injured 170 others. The Justice Department refused to pursue a probation revocation case in that incident, opting instead to give BP another year to make the upgrades at the refinery.

Libya?

McCaskill would not say exactly what the government’s “unusual and compelling urgency” is in awarding the fuel contract to Air BP. One possibility is that the jet fuel Air BP is supplying is intended for aircraft leaving Dover Air Force Base carrying cargo to support NATO’s air war against Libya. Obama turned over control of the entire Libya operation, known as Operation Odyssey Dawn, to NATO on March 31. But over the past week, NATO has complained that it is running short of munitions.

McCaskill referred questions about whether the jet fuel Air BP is supplying over the next 46 days is being used on aircraft utilized for Libya operations to Dover Air Force Base. Brett Kangas, a spokesman for Dover, said he was unable to obtain answers to specific questions about what aircraft the fuel is being used for and what the mission is.

But a March 31 news release posted on Dover Air Force Base’s web site provides some clues. It says Dover has “four C-5M aircraft, all of which are involved in the support of the international crisis in Libya.”

“In order for the strike operations implementing the no-fly zone to continue, the ‘bullets’ have to make it to the fight and that is where Dover Air Force Base delivers,” the Dover press release states. “Delivering oversized cargo is the name of the game here at Dover [Air Force Base, Delaware].”

Last Friday, on the same day the Air BP contract was set to begin, unnamed US and NATO officials told The Washington Post NATO is running short on precision bombs and other munitions for the military action that began a little more than a month ago.

“The shortage of European munitions, along with the limited number of aircraft available, has raised doubts among some officials about whether the United States can continue to avoid returning to the air campaign if Libyan leader Moammar Gaddafi hangs on to power for several more months,” the Post reported.

Kangas noted, however, that there is a possibility the jet fuel could also be used for C-17 aircraft flying out of Dover for humanitarian missions to Japan.

Awarding Air BP a contract to supply fuel for aircraft supporting Libya operations, if that turns out to be the case, would be ironic. Last year, BP confirmed that it told the British government in 2007 that the company’s $900 million oil contract with Libya would be at risk unless a prisoner transfer agreement, which allegedly included Abdel Basset Ali al-Megrahi, the Libyan intelligence official convicted of the Lockerbie bombing of Pan Am Flight 103, between the two countries was hammered out.

Too Big to Fail

Environmental Protection Agency (EPA) officials held talks about possibly debarring or limiting BP from receiving additional government contracts several months after the deadly April 20, 2010, explosion aboard the Deepwater Horizon drilling rig, which claimed the lives of 11 workers and spilled at least five million barrels of oil into the Gulf.

But two senior EPA officials, who spoke to Truthout on condition of anonymity, said those discussions “went nowhere” largely because the federal government relies too heavily on BP to meet its needs and “arguments were raised” by “various agency officials” about the “possibility of debarment being a threat to national security.”

“But ultimately what it came down to was a lack of interest in holding this company accountable,” one EPA official said.

In an interview last year, Jeanne Pascal, the former debarment counsel at the EPA’s Seattle office who spent more than a decade working on issues related to environmental crimes BP had been convicted of, said she had to proceed with caution when she considered debarring the oil company from receiving government contracts.

“If I had debarred BP while they were supplying 80 percent of the fuel to US forces it would have been almost certain that the Defense Department would have been forced to get an exception,” Pascal said.

She had noted that the 80 percent figure was provided by her “contact,” an attorney, who works at the Defense Energy Support Center, the agency that responsible for purchasing all of the fuel for the military.

“There’s a provision in the debarment regulations that says in a time of war or extreme need exceptions can be granted to debarment so that federal agencies with critical needs can continue doing business with debarred contractors. I was in a quandary,” Pascal added. “If I moved forward with debarment we would have had a major federal contractor doing business with the federal government with no governmental oversight or audit provisions. I felt oversight terms and conditions were critical with BP, so I pursued settlement of the matter in the hopes of getting oversight and audit terms.”

Amey, POGO’s general counsel, said that “the government still turns [to BP] with goods and services and does not take into account their past performance, level of responsibility and the fact they violated laws is a perfect example of a contractor too big to fail.”

On POGO’s Federal Contractor Misconduct Database, BP comes in at number 48 in a list of the top 100 government contractors. But the company ranks second, behind Lockheed Martin, as having the most instances of misconduct – 53 – since 1995, which has resulted in more than $1.6 billion in fines.

Those factors do not appear to be of concern to the federal government.

According to USAspending.gov, which tracks government contracts, BP was awarded 52 government contracts worth $56.5 million for fiscal year 2011 to supply fuel, gas, and other petroleum products to agencies such as the Defense Department and Department of Health and Human Services. From fiscal year 2006 through 2010, BP received 707 government contracts worth nearly $7 billion.

However, the federal government does want the public to believe it scrutinizes its awardees before turning over billions in taxpayer dollars to companies such as BP.

Last Friday, the government launched its answer to POGO’s Federal Contractor Misconduct Database: the Federal Awardee Performance and Integrity Information System (FAPIIS).

“In 2008, Congress passed the law that created FAPIIS, which agencies must check before awarding a contract or grant to ensure the prospective awardee is ‘responsible,'” POGO reported. As a “condition for making FAPIIS public, a few concessions had to be granted to the entities listed in it. This included making so-called ‘past performance reviews’ off-limits to the public and only posting data entered into FAPIIS on or after April 15, 2011.”

That means the public won’t be able to find any information about BP’s past misconduct. Indeed, a search for BP Products North America’s government contracts did not turn up any critical reports about the company.

Prior to the database search, a message pops up. It says: “Contracting officials should be aware that use of the information in the FAPIIS systems should not result in de facto debarment. Current procedures emphasize that certain past performance in the system may no longer be relevant to a determination of present responsibility.”

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