Donald Trump’s election as president and his recently completed transformation of Washington’s Old Post Office Pavilion into a luxury hotel have created a legal headache: the 60-year lease of the federal property prohibits any elected official from owning a share of the project.
Two former White House contracting experts who disclosed the problem contend that the best solution is for the government to terminate the lease, essentially forcing Trump to divest himself of the property to avoid conflicts of interest.
The lease also allows the government to sell the property to a private party, which would then serve as Trump’s landlord.
When Trump’s daughter, Ivanka, signed the $180 million lease with the General Services Administration on behalf of his organization in August 2013, he was not yet a candidate for the presidency. Prospects for his election as president seemed far-fetched.
Now agency officials and Trump’s legal advisers must confront what to do to address the problem, after the president-elect spent tens of millions of dollars to turn the historic property into the glittering Trump International Hotel-Old Post Office.
Already, Trump and his team have drawn criticism for encouraging foreign government officials to book rooms at the hotel, including for his upcoming inauguration on Jan. 20, an arrangement that could create the appearance they are being induced to curry favor with the incoming president.
The clause in the lease was designed to prevent conflicts of interest from turning an arms-length financial relationship into what amounts to a cozy insider’s deal, wrote Steven Schooner, who oversaw federal procurement legal matters for the Clinton administration and Daniel Gordon, President Barack Obama’s first procurement policy administrator. Schooner is now a law professor at George Washington University, and Gordon is a senior adviser to the school’s Procurement Law Program.
In an opinion piece published Monday in Government Executive magazine, Schooner and Gordon contended that the deal represents “an intolerable intermingling of an elected official’s government duties and his family’s personal financial interests.”
“To protect the integrity of the federal government’s procurement process, GSA must end its lease arrangement with President-elect Trump now,” they wrote.
To protect the integrity of the federal government’s procurement process, GSA must end its lease arrangement with President-elect Trump now.
Steven Schooner and Daniel Gordon, former senior federal contracting officials
The GSA said in a statement that, as required when Congress ordered the redevelopment of the Old Post Office in 2008, it “ran a fair and open competition, subject to careful and rigorous review, which resulted in the selection of the Trump Organization as the preferred private sector entity to redevelop the Old Post Office.”
“It is the Office of Government Ethics that provides guidance to the executive branch on questions of ethics and conflicts of interest,” the agency said. “GSA plans to coordinate with the president-elect’s team to address any issues that may be related to the Old Post Office building.”
However, the Office of Government Ethics lacks jurisdiction over the terms of federal contracts, and so its only role might be to advise the Trump White House.
A spokesman for the ethics office declined to comment. Trump’s transition team did not respond to a request for comment.
Schooner and Gordon said the terms of the government’s deal with Trump are consistent with long-accepted restrictions against government contracts with federal employees or organizations controlled by one or more government employee.
Federal contracting rules state that the policy “is intended to avoid any conflict of interest that might arise between the employees’ interests and their government duties, and to avoid the appearance of favoritism or preferential treatment by the government toward its employees.”
GSA plans to coordinate with the president-elect’s team to address any issues that may be related to the Old Post Office building.
General Services Administration
The problem will become palpable after the inauguration, Schooner and Gordon wrote, when Trump will appoint a new GSA administrator. Part of that person’s job will be to oversee the lease with the Trump Old Post Office LLC, part of the Trump Organization, for which Trump currently is president, chairman and majority shareholder.
Trump has said he will put his children in charge of his vast real estate holdings when he assumes the Oval Office, but the two ex-White House contracting specialists say that wouldn’t avoid the appearance of conflicts of interest, if not direct conflicts.
“That is why we would not tolerate a judge deciding a case involving a family member,” they wrote.