BP suspended from new US gov't contracts

The suspension marked yet another obstacle for a company that has struggled to revive its tarnished image in the U.S. and abroad after the 2010 explosion that killed 11 workers and led to the largest oil spill in U.S. history.

BP has been a major supplier of energy to the U.S. military, and in 2012 sold more than $1 billion of mostly fuel products to the Defense Department and other U.S. agencies, including the General Services Administration and the Labor Department. Christine Tiscareno, an analyst at with S&P Capital IQ in London, said being ineligible for new contracts won't dramatically affect the company because BP signed a round of contracts in February that won't be affected.

The much greater impact, analysts said, will be if the suspension drags on and BP misses out on leasing new public lands to drill.

"How big this is depends on how long it lasts," said Phil Weiss, an analyst at Argus Research. "It's a negative that they can't participate in (today's sale), but it's not a big concern. If it happens two times, or three times, or ten times, it's a much bigger concern."

An EPA official said Wednesday that the plea agreement includes a provision for how BP can satisfy the concerns that stand in the way of the suspension being lifted. That order, if the court accepts it during sentencing, would give BP 60 days to address the conditions that led to violations. If the government approves the plan, it becomes part of BP's criminal probation.

But the suspension could still remain in effect while civil claims against BP move forward, said the EPA official, who spoke on condition of anonymity to discuss terms of the agreement. In addition to the criminal proceedings, BP faces huge civil claims covering the billions of dollars in civil penalties the U.S. government and the Gulf states are seeking from it because of environmental damage.

A trial in the civil case is scheduled for early next year. Attorney General Eric Holder and the states have vowed to press their case and BP has vowed to fight it. However, negotiations have been under way in an effort to reach a settlement. At the time of the criminal settlement, Holder said the government intended to show in the upcoming civil case that BP was grossly negligent in causing the spill.

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Associated Press writers Bob Barr in London, Jonathan Fahey in New York and Pete Yost in Washington contributed.