President-elect Donald Trump might be in breach of contract concerning his new Washington, D.C., hotel the moment he takes the oath of office, according to two experts in governmental contract law.
Steven Schooner and Daniel Gordon shined a bright light with their piece in Government Executive magazine on an obscure piece of language found in the lease agreement Trump signed to take control of the city's Old Post Office building, which the Trump Organization redeveloped into the Trump International Hotel Washington, D.C.
But Trump doesn't own the building. Instead, he signed a 60-year lease with the General Services Administration (GSA), the independent federal agency that manages and supports the office operations of the government. As Schooner and Gordon pointed out, the GSA wrote the lease in a way that excludes federal officials from being involved or profiting from the redevelopment of the historic building:
“No ... elected official of the Government of the United States ... shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom...
Renee Kelly, spokeswoman for the GSA, told NBC News on Tuesday that the agency "plans to coordinate with the president-elect's team to address any issues that may be related to the Old Post Office building."
Kelly went on to note in the statement to NBC: "GSA 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. GSA negotiated a lease with the Trump Organization and submitted the details to Congress prior to signing the lease in August 2013."
However, once Trump takes the oath of office on Jan. 20, he'll be an elected official of the federal government. He'll essentially be paying himself rent on the Old Post Office — and in clear violation of the lease that Trump agreed to in June 2013, after over a year of negotiating.
Schooner and Gordon take pains to describe in great detail the impossible bind GSA officials will be in after Trump assumes his role in office. As a federal agency, the GSA has a duty to protect the buildings it administers and the best interests of the American people. Yet, the President of the United States will hold one of its leases. It's a delicate situation with no obvious solution.
As the two experts wrote, they believe Trump has breached that lease and are unambiguous in their advice:
"The government should immediately end the hotel lease relationship, before Trump becomes president."
In their view, Trump has already made it clear that he won't be divesting himself of potential conflicts of interest, and the government must do it for him, before he takes control of office. The authors reason that the worst that could happen to the government is a lawsuit from the Trump Organization against the GSA, and a judge awarding nominal damages.
This, in their view, is a small price to pay for safeguarding the sanctity of the government's contract system.