The BP oil-spill cleanup effort in the Gulf of Mexico came with a heavily advertised pledge to do what was necessary to alleviate the disaster, but contractors, subcontractors and local officials in the Louisiana parishes most affected say the company owes hundreds of millions of dollars for work already completed and has not paid some invoices in more than three months.
Contractors and subcontractors with BP’s “Vessels of Opportunity” program have maxed out their credit lines and, in some cases, have not been able to pay their own employees over the past two weeks, parish presidents say.
Meanwhile, the petroleum behemoth, whose third-quarter earnings topped $5 billion, is negotiating with U.S. Coast Guard-certified oil-spill removal organizations to scale back the amounts owed to subcontractors for work they completed months ago, according to local emergency-response management officials.
“I believe many vendors are not being paid, and I’m frustrated by that,” said David B. Dysart, director of homeland security for St. Bernard Parish. “BP is willing to negotiate now that the fire is being put out, but that has not been the case for some time.
“Subcontractors who are having trouble paying their own bills are being negotiated down on the back end of their agreements,” he said.
Mr. Dysart explained that BP contracted with various spill-removal organizations, which then hired boat captains, fishermen and shrimpers to do much of the cleanup.
“Now BP is telling those organizations to negotiate down the subcontractors, and the word down here is that anyone who talks badly about BP will be shut out of future business,” he said. “If oil-spill removal organizations aren’t standing up for their subcontractors, it’s because they are afraid to. [Subcontractors] have been coming to us for months about not being paid, but they are also afraid of being blackballed.”
“The most common reason for an invoice being held up is a lack of supporting documentation,” she said. “The other reason is we are now paying based on the terms of the agreement versus emergency payments.”
Ms. Feick, who declined to discuss specifics concerning pending contractors, said BP had added staff to its accounts-payable office and permanent service representatives had been assigned to some of the larger vendors, those with the most subcontractors.
The catastrophic spill, which began April 20, from BP’s Deepwater Horizon rig brought the fishing industry in Louisiana and parts of Florida and Texas to a halt, and many fishermen turned to recovery efforts as a source of income - even though the work involved exposure to toxic substances and presented health risks.
While the Coast Guard is tasked with overseeing the adequacy of BP’s cleanup and ordering additional measures if necessary, Mr. Dysart said the agency has no authority over who gets contracts or the process by which payments are made.
“There’s nothing I know of from a government perspective to prevent BP from talking to their prime vendors about controlling price,” he said, adding that the result is that small-business owners whose livelihoods have been affected are forced to accept payments less than for what they contracted or risk going bankrupt.
St. Bernard Parish President Craig Taffaro said a company in his parish, Loupe Construction and Consulting Co., was paying its subcontractors in advance of being paid itself until it could no longer afford to.
An attorney for Loupe Construction, a 12-year-old family-owned construction management, engineering and disaster-response company west of New Orleans, said his client thinks BP owes the company for its cleanup efforts, and it has extended a great deal of its own resources to meet payroll and other demands since the project began. He said BP has settled the claims of the larger subcontractors, but that at one point Loupe was claiming $100 million.