It’s difficult to imagine a contractor not already on the federal government’s blacklist that presents a stronger case for exclusion.
The federal government should suspend the Trump Organization from doing business with agencies. The Trump family businesses should in fact be debarred, but the standard for suspension is lower, the case is more clear, and the permissible period for suspension—up to one year—is sufficient for the government to avoid the worst risks associated with doing additional business with the Trump family.
It’s difficult to imagine a contractor not already on the federal government’s excluded party list (or “blacklist”) that presents a stronger case for exclusion. The most likely reason Trump Org hasn’t been suspended is a fear of retaliation, which only underscores why the government must stop doing business with the Trumps.
Not a Close Call
Agencies most frequently suspend firms based upon adequate evidence of an offense indicating a lack of business integrity or business honesty that seriously and directly affects the contractor’s present responsibility. In 2020, only the willfully ignorant believe that Trump businesses embrace integrity and honesty.
By itself, the House of Representatives’ December 19 impeachment of President Trump, the Trump Organization’s principal owner and namesake, justifies a suspension. An indictment for bribery, falsification or destruction of records, making false statements, or tax evasion is enough for a federal suspension and debarment official to suspend a contractor. The articles of impeachment charge “high crimes and misdemeanors” including 1) soliciting a foreign government’s interference—the quid pro quo tied to Congressionally-approved aid to Ukraine—for corrupt purposes (personal political benefit); and 2) obstructing Congress. While impeachment proceedings are not completely analogous to trials (as the televised hearings demonstrate), the House’s impeachment is the procedural equivalent of a grand jury’s indictment.
More broadly, two seven-figure settlements between a contractor and a state attorney general within a few years is one more than Uncle Sam should tolerate. The former New York attorney general agreed to a $25 million settlement with the Trump Organization based on “adequate evidence” of “making false statements,” after “su[ing] Donald Trump for swindling thousands of innocent Americans … through a scheme known as Trump University.” Last year, the current New York attorney general caused the dissolution of the Trump Charitable Foundation and forced payment of nearly “$2 million for misusing charitable funds for [Trump’s] own political gain,” based on a case alleging “a shocking pattern of illegality, ... repeated and willful self-dealing...[&] clear and repeated violations of state and federal law[.]”
But that’s not all. The District of Columbia attorney general recently sued the Trump Organization for more than $1 million in unreasonable and improper payments from the not-for-profit Presidential Inauguration Committee to Trump’s Hotel. And that suit is unrelated to the 2017 D.C. and Maryland attorneys general lawsuit alleging that President Trump violates the Constitution’s Emoluments Clauses by continuing to accept money from foreign and domestic governments through transactions at GSA’s Trump International Hotel (blocks from the White House).
None of this is normal. Conversely, suspending and debarring risky contractors to protect the government from doing business with them is a common, routine, everyday occurrence. What’s uncommon and inexplicable is that the Trump Organization has not yet been suspended.
A Common Solution
To protect against unnecessary risk, the federal government only does business with “responsible” contractors. Before awarding individual contracts, contracting officers must affirmatively determine that prospective contractors are, among other things, qualified, sufficiently experienced, staffed, and possessing a “satisfactory record of integrity and business ethics.”
In addition to pre-award contracting determinations, agencies may exclude individuals or firms altogether—governmentwide—for extended periods of time. Any federal executive agency designated official may suspend firms for up to one year or debar them for up to three years. Once these individuals and firms have been suspended, debarred, or declared ineligible (and listed in the System for Award Management), agencies cannot award them contracts or solicit offers from them, nor can the excluded parties be subcontractors or agents to other contractors, unless their “timeout” is waived.
This isn’t unusual or exotic. During fiscal year 2018, agencies completed more than a dozen of these actions every business day—480 suspensions, 1,542 proposed debarments, and 1,334 debarments.
Yes, many of the Trump Organization’s improprieties have not been fully investigated or litigated. That’s normal. Agency officials may suspend contractors (or propose them for debarment) temporarily, while providing the contractor due process, including opportunities to appear with counsel, submit documentary evidence, and present witnesses to prove present responsibility. Pending the resolution of those proceedings, however, the contractor is ineligible to compete for government work.
This would have dramatically simplified matters when the White House attempted to bypass long standing transparency and competition mandates and award a lucrative, high-profile Group of Seven (G-7) conference, lodging, and hospitality contract to Trump’s Doral golf resort in Florida.
It would avoid a repeat of Vice President Pence visiting a Trump resort 180 miles away from his Ireland meetings or dozens of Air National Guard crews lodging at Trump’s Turnberry Resort in Scotland (raising skepticism regarding increased Air Force reliance on nearby Prestwick Airport). Sadly, it would probably prove insufficient to eliminate, although it might reduce, government expenditures on lodging, meals, and golf cart rentals at Mar-a-Lago or other Trump properties where the President mixes business and pleasure. But it’s a start.
An “Impeccable Standard”
The Federal Acquisition Regulations’ standards of conduct state that: “Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct.” Here, actions speak louder than words. President Trump has consistently demonstrated disdain for norms, rules, customs, and oversight of federal contracting by exploiting public office for private gain, embracing conflicts of interest, eschewing transparency, and disregarding compliance with statutory and regulatory requirements.
Trump ignored the Office of Government Ethics’ advice to divest his ownership interests before the inauguration and avoid the conflict of interest inherent in the GSA lease to operate the Trump International Hotel in Washington, making Trump, in effect, both landlord and tenant. Lev Parnas (indicted for conspiracy, false statements, and obstruction) and his colleague, Trump’s personal lawyer, Rudy Giuliani, have recast the hotel as an unsavory “breeding ground” for the “negotiations” at the heart of the impeachment hearings. In 2019, the Trump Organization began soliciting offers for the hotel, pitching a lucrative opportunity for potential buyers: "Tremendous upside potential exists for a new owner to fully capitalize on government related business upon rebranding of the asset," read the 46-page marketing brochure obtained by CNN.
Alas, even if a federal agency suspended the Trump Organization, GSA could continue its conflict-ridden and emolument-generating lease relationship, because, for “compelling” reasons, federal agencies may continue contracts with, and even award new contracts to, excluded firms.
The Citizens for Responsibility and Ethics in Washington’s tally of “conflicts of interest that stem from the president’s decision not to divest from the Trump Organization” chronicles 2,856 total conflicts (in 1,100 days), including 73 political events at Trump properties, 445 Presidential visits to Trump Organization businesses, 111 special interest group events at Trump properties, 65 foreign trademarks granted to Trump businesses, plus 130 foreign officials and 119 members of Congress who visited a Trump business.
A Pattern of Behavior
The recently filed federal court complaint protesting the award of the Defense Department’s high-profile, $10 billion cloud computing contract alleges that President Trump “launched repeated public and behind-the-scenes attacks to steer the … contract … to harm his perceived political enemy—Jeffrey P. Bezos, … owner of the Washington Post.” The Pentagon’s inspector general is investigating the $400 million border wall contract awarded to Fisher Sand & Gravel, after President Trump and Jared Kushner applied inappropriate influence, despite the firm’s checkered history and inability to meet the government’s operational requirements. Questions surround the relationship between private-prison and immigration detention behemoth GEO, its donations to a Trump super-PAC, and spending at a Trump resort. All of which falls well beneath federal contracting standards that require government business be “conducted in a manner above reproach.”
Smart folks avoid doing business with consistently untruthful people. Yet the Washington Post calculates that: “Three years [into] … office, President Trump has made more than 16,200 false or misleading claims.” And, since it’s impossible to separate the individual from the business, you can’t expect the “highest degree of public trust” from the Trump Organization in light of the company President Trump keeps, including a rogue’s gallery of attorneys, advisors, and associates who have been indicted, convicted, or willing to plead to criminal behavior. Consider Trump’s former personal lawyer, Michael Cohen, sentenced for campaign finance violations and tax evasion (involving hush money to hide Trump’s extramarital affairs, which suggests that President Trump’s 2017 financial disclosure report (Office of Government Ethics Form 278e) knowingly underreported his liabilities.
Pulitzer Prize winning reporter David Fahrenthold determined that: “nearly every organization [Trump] has led in the past decade is under investigation.” The New Yorker quipped: “the Trump Organization’s core competency is in profiting from misrepresentation and deceit and, potentially, fraud…. [M]any of [its] international deals also bore the hallmarks of financial fraud, including money laundering, deceptive borrowing, outright lying to investors, and other potential crimes.” Trump Organization resorts knowingly employed illegal immigrants and rarely used the e-Verify system (mandated for federal contractors) prior to New York Times investigative reporting. So it’s unlikely that the Trump Organization could demonstrate a “satisfactory performance record” with its well-documented history of bankruptcies, payment delinquencies, and frivolous litigation, and numerous ongoing investigations into tax evasion and money laundering (involving, but not limited to, cash real estate deals with Russian interests and questionable Deutsche Bank loans).
It’s true that not all contractor missteps, mistakes, misdemeanors, or even felonies, indictments, or convictions, lead to suspension or debarment. Firms avoid exclusion through negotiated administrative agreements, improvements to internal compliance programs or the firm’s ethical culture and corporate governance processes, punishment and elimination of bad actors, and reliance on independent third-party monitors. That’s not the Trump Organization’s style. A Financial Times discussion of Russian money laundering reported that former Trump Organization executive Abe Wallach quipped: “Donald doesn’t do due diligence.”
Do The Right Thing
Suspension and debarment officials at federal agencies know that, while it would take enormous personal courage for a government employee to suspend (or debar) the Trump Organization, the substantive case for doing so is simple. Follow the example of the whistleblowers, military officers, and ambassadors that shined a light on this administration’s corruption. Lay out the facts and apply the regulations. Suspend the Trump Organization, propose it for debarment, and allow the company’s executives to demonstrate that it is a “responsible contractor” the government should do business with. You’d be protecting the taxpayers, and you just might force the President to place the nation before his personal business interests.
Steven L. Schooner is the Nash & Cibinic Professor of Government Procurement Law at the George Washington University (GW) Law School.
Kathleen Clark is Professor of Law at the Washington University in St. Louis and a leading expert on government ethics.