Law Professor Explains Why Trump Can't Hold Lease On New D.C. Hotel

NPR's Ari Shapiro talks with Steven Schooner, professor of government procurement law at George Washington University, about his op-ed in Government Executive magazine calling on the General Services Administration to end the Trump Organization's lease of the Old Post Office Pavilion, the site of the new Trump hotel on Pennsylvania Avenue in Washington, D.C.

ARI SHAPIRO, HOST:

The new Trump International Hotel on Pennsylvania Avenue in Washington, D.C., is in a historic federal building. A government agency called the General Services Administration, or GSA, negotiated the lease with the Trump Organization. And that lease includes this language. No elected official shall be admitted to any share or part of this lease or to any benefit that may arise there from.

Earlier today I spoke with Steven Schooner via Skype. He is a professor of government procurement law at George Washington University Law School. He has read the lease and come to this conclusion.

STEVEN SCHOONER: I think that the only logical or reasonable reading of that language is that the president of the United States may not be admitted to a share of the lease and may not benefit from it. So come January 20, it seems to me the president-elect is in breach of the contract. And quite simply, I believe the GSA should end the contract. They should simply terminate it.

SHAPIRO: Now, when a group of reporters and editors from The New York Times asked Trump about conflicts of interest, he said the law is totally on my side, meaning the president can't have a conflict of interest - sounds like you're saying not true.

SCHOONER: No, absolutely wrong and wrong for a number of reasons. So I think what he meant to say is that many of the technical rules that apply to government employees with regard to conflicts of interest don't apply to him.

But he lost sight of the much larger issue, which is, a conflict is when you're basically serving two masters. To the extent that he is going to appoint the head of the GSA and the head of the GSA will serve at his pleasure and he's going to be basically the tenant, there's no way there can be an arm's length relationship between the two parties - more importantly, that GSA employees have to demand financial information from the Trump Organization on an annual basis and then renegotiate the pricing.

There's no way a GSA civil servant is going to be able to negotiate with the president or the president's children with the government and the public's interest at heart.

SHAPIRO: Trump recently settled a lawsuit over Trump University for $25 million or so, and you argue that under ordinary circumstances, that would be a red flag for GSA and that in fact it might be enough to prevent the office from ever doing business with the Trump Organization again.

SCHOONER: Absolutely. If you read the New York attorney general's press release, basically what they said is that among other things, there was fraud. If this was any other contractor, there would be members of Congress screaming at the GSA suspension and debarment official, basically saying, you must ensure to protect the government's interests that the government never does business with this type of contractor again.

SHAPIRO: Talk about how this would practically work. The Trump Organization put millions of dollars into this hotel. It just opened. If GSA suspended the contract, what would happen to the existing hotel?

SCHOONER: Well, the obvious solution would be a transfer or what in government contracts we call innovation. GSA could go to some other firm and basically say, run the hotel for us. It's just another lease. So that's easy enough.

But let's also be clear. GSA could simply tomorrow - and I believe they should - terminate the contract because the president-elect has breached a material or a significant or important term in the contract. If they terminate, look; we know the Trump organization is notoriously litigious, so maybe they sue. But in terms of contract interpretation 101, we think the GSA wins that case.

But even if they lose - and this is so important - it's only money. The principle here, the idea that federal procurement is supposed to be free from these types of conflicts, is much more important than a little bit of money.

SHAPIRO: We requested an interview with the head of GSA. They declined and sent us a statement that says in part, it is the Office of Government Ethics that provides guidance to the executive branch on questions of ethics and conflicts of interest. GSA plans to coordinate with the president-elect's team to address any issues that may be related to the Old Post Office building, which is the home of the Trump hotel. What do you make of that statement?

SCHOONER: Well, the Office of Government Ethics is a policy shop. They specifically make clear that they don't solve these kinds of problems. They don't investigate. They don't prosecute. They make policy.

It's GSA's contract. They had plenty of time to figure out a solution. They can't foist their problem off on anybody else, and it's time for them to step up to the plate and do the right thing.

SHAPIRO: Steven Schooner's a professor of government procurement law at the George Washington University Law School, and his article in Government Executive magazine is called "GSA's Trump Hotel Lease Debacle." Thanks for joining us.

SCHOONER: Thanks so much.

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