- The Washington Times - Sunday, November 14, 2010

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.”

BP spokeswoman Hejdi Feick said that more than $9.5 billion had been paid out on 92,000 invoices as of Nov. 4, not including subcontractors.

“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.

Loupe’s attorney, Karl Dix Jr. in Atlanta, added that his client is attempting to directly resolve the claims of more than 20 subcontractors, while BP is negotiating directly with approximately 20 subcontractors on its own.

“We are working through these issues cooperatively with BP,” Mr. Dix said. “This was an emergency contract, and anytime you have an emergency contract, these issues take time.”

In nearby Plaquemines Parish, other contractors are facing equally complex negotiations.

The DRC Group, a company based in Mobile, Ala., was until recently managing more than 480 vessels and 750 fishermen, oystermen and trained oil-response technicians to deal with the BP spill. Plaquemines Parish President William Harold “Billy” Nungesser said BP severed its contract with DRC last week, which he described as a “good local participant, whose name is now getting dragged through the mud down here.”

Mr. Nungesser, whose parish suffered a majority of the damage from the spill, said he thinks DRC is owed more than $50 million, though estimates from other sources say the figure is closer to $80 million. Those sources say DRC has maxed out its credit line to pay subcontractors, but was forced to suspend payroll payments to some of its most highly paid employees two weeks ago.

“BP promised to leave ample assets to do the job, and I wish I could say I have confidence in them, but I do not,” Mr. Nungesser said.

Robert Isakson, managing director of the DRC Group, said the company has “paid the hundreds of fishermen and women, oystermen, shrimpers and citizens who worked on the oil-spill response millions of dollars each week from our own funds.”

“Recently, we advised BP that we would no longer fund its cleanup operation without continual reimbursement,” he said. “We are in negotiations with BP for them to pay us the funds due for work we performed.”

Mr. Isakson said BP asked DRC to meet on Monday in Houston to resolve the past-due payments, “and we plan to do that.”

George Touart, of Golden Professional Solutions (GPS) in Pensacola, Fla., said BP hasn’t exactly told him they are not going to pay what they owe, but then they haven’t paid him since June. GPS entered into a teaming agreement with another company that subcontracted from one of BP’s top-tier contractors, he said, but his firm advanced the costs of buses, trailers and training for removal workers.

Though GPS’ labor costs were paid by another BP contractor, Mr. Touart said his company is owed more than $500,000 for the costs his firm advanced.

“Neither BP nor its top-tier contractor has paid me a damn dime since June,” he said. “We’re a small company, and it’s not right to treat us this way, when we worked seven days a week, 24 hours a day.”

Retired Coast Guard Adm. Thad Allen, in charge of the government’s response to the spill, has publicly noted that in addition to its contractual obligations, BP PLC has a duty to shareholders not to spend too much.

But senior government scientist Bill Lehr of the National Oceanic and Atmospheric Administration told reporters recently that once officials realized the spill was much larger than estimated, oil-response staff was “given a blank check.”

“This thing continues to snowball,” said Mr. Nungesser, speculating that negotiations would not be resolved soon. “I get 50 phone calls a day, from the fuel guy to the fisherman.”

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