[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
GSA OUTLEASES AND THE TRUMP OLD POST OFFICE HOTEL
=======================================================================
(116-50)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 28, 2020
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
______
U.S. GOVERNMENT PUBLISHING OFFICE
42-245 PDF WASHINGTON : 2020
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
PETER A. DeFAZIO, Oregon, Chair
SAM GRAVES, Missouri ELEANOR HOLMES NORTON,
DON YOUNG, Alaska District of Columbia
ERIC A. ``RICK'' CRAWFORD, Arkansas EDDIE BERNICE JOHNSON, Texas
BOB GIBBS, Ohio RICK LARSEN, Washington
DANIEL WEBSTER, Florida GRACE F. NAPOLITANO, California
THOMAS MASSIE, Kentucky DANIEL LIPINSKI, Illinois
MARK MEADOWS, North Carolina STEVE COHEN, Tennessee
SCOTT PERRY, Pennsylvania ALBIO SIRES, New Jersey
RODNEY DAVIS, Illinois JOHN GARAMENDI, California
ROB WOODALL, Georgia HENRY C. ``HANK'' JOHNSON, Jr.,
JOHN KATKO, New York Georgia
BRIAN BABIN, Texas ANDRE CARSON, Indiana
GARRET GRAVES, Louisiana DINA TITUS, Nevada
DAVID ROUZER, North Carolina SEAN PATRICK MALONEY, New York
MIKE BOST, Illinois JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas JULIA BROWNLEY, California
DOUG LaMALFA, California FREDERICA S. WILSON, Florida
BRUCE WESTERMAN, Arkansas DONALD M. PAYNE, Jr., New Jersey
LLOYD SMUCKER, Pennsylvania ALAN S. LOWENTHAL, California
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
BRIAN J. MAST, Florida STACEY E. PLASKETT, Virgin Islands
MIKE GALLAGHER, Wisconsin STEPHEN F. LYNCH, Massachusetts
GARY J. PALMER, Alabama SALUD O. CARBAJAL, California,
BRIAN K. FITZPATRICK, Pennsylvania Vice Chair
JENNIFFER GONZALEZ-COLON, ANTHONY G. BROWN, Maryland
Puerto Rico ADRIANO ESPAILLAT, New York
TROY BALDERSON, Ohio TOM MALINOWSKI, New Jersey
ROSS SPANO, Florida GREG STANTON, Arizona
PETE STAUBER, Minnesota DEBBIE MUCARSEL-POWELL, Florida
CAROL D. MILLER, West Virginia LIZZIE FLETCHER, Texas
GREG PENCE, Indiana COLIN Z. ALLRED, Texas
SHARICE DAVIDS, Kansas
ABBY FINKENAUER, Iowa
JESUS G. ``CHUY'' GARCIA, Illinois
ANTONIO DELGADO, New York
CHRIS PAPPAS, New Hampshire
ANGIE CRAIG, Minnesota
HARLEY ROUDA, California
CONOR LAMB, Pennsylvania
------
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
DINA TITUS, Nevada, Chair
MARK MEADOWS, North Carolina DEBBIE MUCARSEL-POWELL, Florida
GARY J. PALMER, Alabama SHARICE DAVIDS, Kansas
JENNIFFER GONZALEZ-COLON, ELEANOR HOLMES NORTON,
Puerto Rico District of Columbia
CAROL D. MILLER, West Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
GREG PENCE, Indiana Georgia
SAM GRAVES, Missouri (Ex Officio) JOHN GARAMENDI, California
ANTHONY G. BROWN, Maryland
LIZZIE FLETCHER, Texas, Vice Chair
PETER A. DeFAZIO, Oregon (Ex
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ iv
STATEMENTS OF MEMBERS OF THE COMMITTEE
Hon. Dina Titus, a Representative in Congress from the State of
Nevada, and Chairwoman, Subcommittee on Economic Development,
Public Buildings, and Emergency Management:
Opening statement............................................ 1
Prepared statement........................................... 2
Hon. Greg Pence, a Representative in Congress from the State of
Indiana:
Opening statement............................................ 3
Prepared statement........................................... 5
Hon. Peter A. DeFazio, a Representative in Congress from the
State of Oregon, and Chair, Committee on Transportation and
Infrastructure:
Opening statement............................................ 6
Prepared statement........................................... 7
Hon. Sam Graves, a Representative in Congress from the State of
Missouri, and Ranking Member, Committee on Transportation and
Infrastructure:
Opening statement............................................ 8
Prepared statement........................................... 9
WITNESS
Hon. Emily W. Murphy, Administrator, U.S. General Services
Administration
Oral statement............................................... 10
Prepared statement........................................... 12
APPENDIX
Questions to Hon. Emily W. Murphy, Administrator, U.S. General
Services Administration, from:
Hon. Peter A. DeFazio and Hon. Dina Titus.................... 51
Hon. Eleanor Holmes Norton................................... 54
Hon. Steve Cohen............................................. 54
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
January 22, 2020
SUMMARY OF SUBJECT MATTER
TO: LMembers, Subcommittee on Economic Development,
Public Buildings, and Emergency Management
FROM: LStaff, Subcommittee on Economic Development, Public
Buildings, and Emergency Management
RE: LSubcommittee hearing on GSA Outleases and the
Trump Old Post Office Hotel
_______________________________________________________________________
PURPOSE
The Subcommittee on Economic Development, Public Buildings,
and Emergency Management will meet on Tuesday, January 28,
2020, at 10:00am in 2167 Rayburn House Office Building, for a
hearing titled GSA Outleases and the Trump Old Post Office
Hotel. The purpose of the hearing is to examine the General
Services Administration's (GSA) outleasing authorities and the
potential assignment of the Trump Old Post Office lease. The
Administrator of General Services will testify.
OLD POST OFFICE BUILDING HISTORY
The Old Post Office Building is a unique, historic building
located at 1100 Pennsylvania Avenue N.W., Washington, DC, and
owned by the GSA. The building was completed in 1899 and served
as the main post office for the Nation's capital. It was placed
on the Historic Register in 1973. After the main post office
closed, the Old Post Office Building was used to house Federal
agency offices and limited retail space. The building was
underutilized for decades. Attempts by GSA to introduce
amenities failed and the Federal government lost money year
after year. For example, in 2007, the building's rental
receipts of $5.4 million were far lower than the total expenses
of the property of $11.9 million, resulting in a loss of $6.1
million to the Federal government.\1\ The House Transportation
and Infrastructure Committee held multiple hearings related to
the Old Post Office Building and passed legislation to require
GSA to find a private partner to redevelop the site.\2\ Until
2016, the Old Post Office Building was one of the oldest
buildings in Washington, D.C. that had yet to be rehabilitated
and preserved.
---------------------------------------------------------------------------
\1\ H.R. Rep. No. 110-724, at p. 3 (2008).
\2\ Old Post Office Redevelopment Act of 2008, P.L. 110-359 (2008).
---------------------------------------------------------------------------
OLD POST OFFICE BUILDING REDEVELOPMENT
In 2008, Congress enacted H.R. 5001, the ``Old Post Office
Redevelopment Act of 2008,'' sponsored by Congresswoman Eleanor
Holmes Norton, which became P.L. 110-359 when signed into
law.\3\ The Act had bipartisan support and directed GSA to move
forward with the redevelopment of the Old Post Office Building.
---------------------------------------------------------------------------
\3\ P.L. 110-359 (2008).
---------------------------------------------------------------------------
In March 2011, GSA issued a Request for Proposals (RFP) for
the redevelopment of the Old Post Office using authority under
Section 111 of the National Historic Preservation Act (NHPA).
On February 7, 2012, GSA announced the selection of the
Trump Organization as the preferred developer for the Old Post
Office.\4\ The Trump Organization's proposal called for
redeveloping the Old Post Office building into a luxury
hotel.\5\
---------------------------------------------------------------------------
\4\ Press Release, ``GSA Selects the Trump Organization as
Preferred Developer for DC's Old Post Office,'' General Services
Administration, Feb. 7, 2012, accessed here: https://www.gsa.gov/about-
us/newsroom/news-releases/gsa-selects-the-trump-organization-as-
preferred-developer-for-dcs-old-post-office.
\5\ The Trump Organization won the competition and submitted the
original proposal. Trump Old Post Office LLC is the party to the lease
and was created after the Trump Organization won the competition.
---------------------------------------------------------------------------
On August 5, 2013 a lease agreement was signed by Donald J.
Trump, for Trump Old Post Office LLC (as tenant) with GSA (as
landlord) for control over and the redevelopment of the Old
Post Office Building.\6\ Trump Old Post Office LLC is a
subsidiary of the Trump Organization.\7\ The Trump Organization
invested $200 million to redevelop the Old Post Office Building
into the 271-room Trump International Hotel.\8\ The lease
agreement extends for 60 years to the year 2076 from the date
of the hotel's grand opening which occurred on October 26,
2016.\9\ The Federal government is entitled to a monthly rental
payment as well as a percentage of profits each year if annual
profits exceed the cost of the annual rental payments.\10\
---------------------------------------------------------------------------
\6\ Ground Leaser by & between the U.S. (as ``Landlord'') & Trump
Old Post Office LLC (as ``Tenant''), Lease No.: GS-LS-11-1307 (Aug. 5,
2013).
\7\ Trump Old Post Office LLC is a Delaware-based corporation at
the time of lease signing owned by Mr. Trump and his three adult
children Ivanka Trump, Donald J. Trump, Jr., and Eric Trump.
\8\ Press Release, ``GSA and Trump Organization Reach Deal on Old
Post Office Lease,'' General Services Administration, June 5, 2013,
accessed here: https://www.gsa.gov/about-us/newsroom/news-releases/gsa-
and-trump-organization-reach-deal-on-old-post-office-lease.
\9\ See ``Old Post Office Building,'' General Services
Administration, accessed here: https://www.gsa.gov/real-estate/gsa-
properties/visiting-public-buildings/old-post-office-building (last
reviewed Sept. 20, 2019).
\10\ Ground Leaser by & between the U.S. (as ``Landlord'') & Trump
Old Post Office LLC (as ``Tenant''), Lease No.: GS-LS-11-1307 (Aug. 5,
2013).
---------------------------------------------------------------------------
Under the lease agreement, the Trump Old Post Office LLC
gained access to the Old Post Office Building in May 2014 for
construction activities. The ceremonial groundbreaking for the
project took place on July 23, 2014.\11\ GSA performed
oversight of compliance with the lease and of construction
activities. The Trump International Hotel partially opened on
September 12, 2016,\12\ and officially opened on October 26,
2016.\13\
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\11\ ``Transformation of Washington's Old Post Office Underway,''
General Services Administration, July 23, 2014, accessed here: https://
www.gsa.gov/blog/2014/07/23/transformation-of-washingtons-old-post-
office-underway.
\12\ Ian Simpson, ``Trump luxury hotel opens just blocks from the
White House,'' Reuters, Sept. 12, 2016, accessed here: https://
www.reuters.com/article/us-usa-trump-hotel/trump-luxury-hotel-opens-
just-blocks-from-the-white-house-idUSKCN11I25L.
\13\ See Trump International Hotel Certificate of Occupancy [on
file with Subcommittee].
---------------------------------------------------------------------------
After President Donald J. Trump's presidential
inauguration, Trump Old Post Office LLC sent a letter to GSA
stating that President Trump transferred his interests in Trump
Old Post Office LLC to DJT Holdings Managing Member LLC, a
revocable trust.\14\
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\14\ ``Evaluation of GSA's Management and Administration of the Old
Post Office Building Lease,'' Office of Inspector General (OIG),
General Services Administration (GSA), JE19-002, January 16, 2019,
accessed here: https://www.gsaig.gov/content/evaluation-gsas-
management-and-administration-old-post-office-building-lease.
---------------------------------------------------------------------------
On March 20, 2017, Trump Old Post Office LLC requested a
certificate stating that Trump Old Post Office LLC was in full
compliance with Section 37.19 of the lease and that the lease
was valid.\15\ On March 23, 2017, GSA's contracting officer for
the lease issued an Estoppel Certificate and accompanying
letter stating that Trump Old Post Office LLC was ``in full
compliance with Section 37.19 and, accordingly, the Lease is
valid and in full force and effect.'' \16\
---------------------------------------------------------------------------
\15\ Ibid.; see Letter from Kevin Terry to Trump Old Post Office
LLC (Mar. 23, 2017), accessed here: https://www.gsa.gov/cdnstatic/
Contracting_Officer_Letter_March_23_2017_
Redacted_Version.pdf.
\16\ Letter from Kevin Terry to Trump Old Post Office LLC (Mar. 23,
2017), at 1, accessed here: https://www.gsa.gov/cdnstatic/
Contracting_Officer_Letter_March_23_2017_
Redacted_Version.pdf.
---------------------------------------------------------------------------
In November 2019, various news articles reported that the
Trump Organization had retained JLL to market the Trump
International hotel to potential buyers.\17\
---------------------------------------------------------------------------
\17\ John Banister, ``JLL Marketing Materials for Trump D.C. Hotel
Reveal Below-Market Occupancy,'' Bisnow, Nov. 15, 2019, accessed here:
https://www.bisnow.com/washington-dc/news/hotel/jll-marketing-
materials-for-trump-dc-hotel-reveal-below-market-occupancy-101811, see
also Jonathan O'Connell & David A. Farenthold, ``Trump's Washington
hotel has fallen behind competitors, with rooms running nearly half
empty, marketing materials show,'' Washington Post Nov. 14, 2019,
accessed here: https://www.washingtonpost.com/business/economy/trumps-
washington-hotel-has-fallen-behind-competitors-with-rooms-running-
nearly-half-empty-marketing-materials-show/2019/11/14/c1a9fc40-070f-
11ea-b17d-8b867891d39d_story.html.
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ASSIGNMENT OF LEASE
Section 15.3 of the lease permits the lessor to sell the
lease under certain conditions. According to the lease:
Following the minimum hold period, Tenant shall have the right
to assign its interest in the Lease or sublease all or
substantially all the Premises, provided that the proposed
Transferee is a Qualified Transferee and Tenant otherwise
complies with this Section 15.3. Prior to such assignment or
sublease of all or substantially all of the Premises, Tenant
shall be required to provide Landlord with detailed information
evidencing that the proposed Transferee qualifies as a
Qualified Transferee (the ``Landlord Qualified Transferee
Confirmation'') and Landlord shall have the opportunity to
confirm whether it concurs that the proposed Transferee is a
Qualified Transferee (the ``Landlord Qualified Transferee
Confirmation''). If Landlord fails to respond within forty-five
(45) days of the Tenant submitting all necessary Qualified
Transferee Information to the Landlord, then Tenant shall
provide a second written notice, then the Landlord Qualified
Transferee Confirmation shall be deemed given.\18\
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\18\ Ground Leaser by & between the U.S. (as ``Landlord'') & Trump
Old Post Office LLC (as ``Tenant''), Lease No.: GS-LS-11-1307, Sec.
15.3 (Aug. 5, 2013).
---------------------------------------------------------------------------
GSA'S OUTLEASING AUTHORITIES
According to the Government Accountability Office (GAO),
``GSA is authorized under certain circumstances to lease
unneeded space to private businesses and other nonfederal
entities--a process known as outleasing'' \19\ Outleasing
``involves the temporary disposal, not the acquisition, of
space,'' \20\ and GSA ``is not required to follow the
standardized processes or to use model lease provisions
contained in the General Services Acquisition Regulation (GSAR)
and other documents pertaining to GSA's more typical leasing
activities.'' \21\ In 2018, GSA published ``The Program
Outlease Guide'' to provide guidance on the process of
outleasing for GSA leasing professionals.\22\
---------------------------------------------------------------------------
\19\ ``Federal Real Property: GSA Outleasing and Restrictions on
Participation of Elected Officials,'' U.S. Government Accountability
Office (GAO), GAO-18-603R, p. 2 (July 25, 2018) accessed here: https://
www.gao.gov/assets/700/693396.pdf.
\20\ Id. at p. 2.
\21\ Id. at p. 2.
\22\ See ``The Outlease Program Guide,'' General Services
Administration (2018) [on file with Subcommittee].
---------------------------------------------------------------------------
GSA's statutory outleasing authorities are listed below:
40 USC Public Buildings, Property and Works
LSubtitle I Federal Property and Administrative
Services
LChapter V Property Management
LSubchapter III--Disposing of Property
LSec. 543--Method of Disposition
40 USC Public Buildings, Property and Works
LSubtitle I Federal Property and Administrative
Services
LChapter V Property Management
LSubchapter V--Operation of Buildings and Related
Activities
LSec. 581--General Authority of Administrator of
General Services
40 USC Public Buildings, Property and Works
LSubtitle I Federal Property and Administrative
Services
LChapter V Property Management
LSubchapter V--Operation of Buildings and Related
Activities
LSec. 585--Lease Agreements
54 USC National Historic Preservation Act
LSec. 306121--Authority to Lease or Exchange
54 USC National Historic Preservation Act
LSec. 306122--Contracts for Management of Historic
Property
WITNESS
LMs. Emily W. Murphy, Administrator of General
Services
GSA OUTLEASES AND THE TRUMP OLD POST OFFICE HOTEL
----------
TUESDAY, JANUARY 28, 2020
House of Representatives,
Subcommittee on Economic Development, Public
Buildings, and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:02 a.m. in
room 2167, Rayburn House Office Building, Hon. Dina Titus
(Chairwoman of the subcommittee) presiding.
Ms. Titus. The subcommittee will come to order. I ask
unanimous consent that the chair be authorized to declare
recesses during today's hearing.
Without objection, so ordered.
Also I ask unanimous consent that the Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearings and ask questions.
Without objection, so ordered.
We will now proceed with opening statements. I will go
first.
Today's hearing is going to focus on the General Services
Administration's handling of the lease at the Old Post Office
Building here in Washington. Owned by the Federal Government,
the building is being leased to the Trump Organization, and now
houses the Trump International Hotel. This morning we are
joined by Ms. Emily Murphy, the Administrator of the General
Services Administration.
And I welcome you to the committee, and appreciate talking
to you earlier.
Administrator Murphy is in a difficult position. She is
responsible for overseeing the Trump Organization's lease of
the Old Post Office Building, and yet her boss is, ultimately,
President Trump. And that presents a serious problem. It is one
that could have been prevented, if the President had divested
from his business interest in the Trump International Hotel, or
put them in a blind trust, like every modern President before
him.
Instead, President Trump is the single largest beneficiary
of the Trump Organization's hotel in Washington. He makes money
when people stay there, and he loses money when people don't.
So let me repeat: President Trump is both the GSA's tenant and
its boss, and that is an obvious problem.
Perhaps, then, it is no surprise that Administrator
Murphy's agency has refused to turn over documents that were
subpoenaed by this committee that would help us determine, one,
whether the President is following the Constitution; and two,
he is complying with the terms of the lease.
We know from dogged reporting that President Trump's DC
hotel isn't going quite as well as he had hoped. While it is
being propped up by foreign governments, corporate executives,
and lobbyists looking to curry favor, that apparently isn't
enough, because the Trump Organization has now announced it is
looking to sell this lease.
Administrator Murphy, as you likely know, last Thursday was
the deadline by which initial bids to purchase this lease were
to be submitted by potential buyers. The Trump Organization is
asking for $500 million for this lease, which is, by far, more
per room than any other luxury hotel here in Washington to
date. That means that you are going to be overseeing the
potential transfer of hundreds of millions of dollars into the
pockets of the President and his family.
Given the myriad of issues and concerns raised by the
execution of this lease from the outset, I want us to make sure
that the GSA and this committee have a clear understanding of
the process, moving forward, and that we are not going to be
repeating the significant mistakes of the past.
What we want to know, and what we want to find out in this
hearing, is if any changes could be made to the terms of the
lease with the new tenant. Additionally, we need to determine
the need for any new legislation to guide and oversee the
outleasing process. But most importantly, American taxpayers
deserve transparency. They need to know who is buying this
lease. And, above all, we need to seek information to ensure
that it is not some foreign government. That arrangement would
not only raise serious ethics questions, but could also
potentially bring into question the Emoluments Clause of the
Constitution, and potentially threaten national security.
Given that the GSA's inspector general concluded last year
that your agency ``ignored the Constitution''--I have put that
in quotes--and has said that you are continuing to ignore the
Emoluments Clause, we hope that we can ensure that, going
forward, with the potential sale of this lease, we will be
abiding by Federal law.
Some of us believe that the Constitution matters. It is the
law of the land, regardless of whether this administration
finds it to be inconvenient or not.
So I thank you, Administrator Murphy, for being with us
today. I thank you in advance for being willing to answer our
questions.
[Ms. Titus' prepared statement follows:]
Prepared Statement of Hon. Dina Titus, a Representative in Congress
from the State of Nevada, and Chairwoman, Subcommittee on Economic
Development, Public Buildings, and Emergency Management
Today's hearing will focus on the General Services Administration's
handling of the lease at the Old Post Office Building here in
Washington, D.C. Owned by the federal government, the building is being
leased to the Trump Organization and now houses the Trump International
Hotel.
This morning we are joined by Emily Murphy, Administrator of the
General Services Administration, and I want to welcome her here to the
Committee.
Administrator Murphy is in a difficult position: she is responsible
for overseeing the Trump Organization's lease of the Old Post Office
Building and yet her boss is ultimately President Trump. That is a
serious problem--and it's one that could have been prevented if
President Trump had divested from his business interests in the Trump
International Hotel or put them in a blind trust, like every modern
President before him.
Instead, President Trump is the single largest beneficiary of the
Trump Organization's hotel in Washington. He makes money when people
stay there, and he loses money when people don't.
So perhaps it's no surprise that Administrator Murphy's agency has
refused to turn over documents that were subpoenaed by this Committee
that would help us determine (1) whether the President is following the
Constitution and (2) complying with the terms of the lease.
Let me repeat: President Trump is both the GSA's tenant and its
boss. That's an obvious problem.
Yet, we know from dogged reporting that President Trump's D.C.
hotel isn't doing as well as he had hoped. While, it's being propped up
by foreign governments, corporate executives, and lobbyists looking to
curry favor, that apparently isn't enough because the Trump
Organization has announced that it's looking to sell this lease.
Administrator Murphy, as you likely know, last Thursday, initial
bids to purchase this lease were to be submitted by potential buyers.
The Trump Organization is asking for $500 million for this lease.
That means that you are overseeing the potential transfer of hundreds
of millions of dollars into the pockets of the President and his
family.
Given the myriad of issues and concerns raised by the execution of
this lease from the outset, I want to make sure that GSA and this
Committee have a clear understanding of the process moving forward and
we are not just repeating significant mistakes of the past.
We want to know what, if any, changes could be made to the terms of
the lease with the new tenant. Additionally, we must determine the need
for new legislation to guide the outleasing process.
Most importantly, American taxpayers deserve transparency in
knowing who is buying this lease; we should all seek to ensure that
it's not some foreign government.
That arrangement would not only raise serious ethics questions, but
it would also potentially bring into question the Emoluments Clauses to
the U.S. Constitution.
Given that GSA's Inspector General concluded last year that your
agency ``ignored the Constitution'' and has said that you are
continuing to ignore the Emoluments Clauses, we hope you will ensure
that any potential sale of this lease abides by federal law.
Some us believe the Constitution matters. It is the law of the
land, regardless of whether this Administration finds that to be
inconvenient or not.
Thank you Administrator Murphy for being with us today and thank
you in advance for answering our questions.
Ms. Titus. And now I will recognize Ranking Member Pence
for an opening statement of 5 minutes.
Mr. Pence. Thank you, Chairwoman Titus. I want to welcome
GSA Administrator Emily Murphy, and thank you for joining us
today.
GSA has accomplished a lot in recent years across its
portfolio. GSA saved Federal agencies $7 billion in just fiscal
year 2019 alone. The DOT Headquarters purchase will realize
significant savings over the long term. And GSA was part of the
team to help stand up the Public Buildings Reform Board
pursuant to the FASTA Act, which will realize billions of
dollars in savings in the sales of unneeded Federal property.
But once again, instead of focusing on critical issues like
those I mentioned, or our crumbling infrastructure, we are here
today focusing on bashing the President.
We have other business before this subcommittee that is
critical to the American taxpayer, including issues that fall
under the purview of the GSA Administrator. For instance,
Ranking Member Meadows and I introduced legislation that will
give GSA some of the tools needed to address the avalanche of
expiring leases. We spend over $5 billion a year on leasing
space. We should be focused on what we can do to ensure these
leases are replaced with good deals, and continue to reduce
costs.
We also have bills pending before this subcommittee to
pilot the use of public-private partnerships to help address a
backlog of GSA projects. We should be focused on solutions to
address the backlog of GSA capital projects so we are not
forced to resort to leasing because we cannot afford to do
anything else.
The Federal Protective Service is responsible for securing
GSA's facilities. There is a reorganization happening right now
involving FPS. But instead of focusing on how this
reorganization may be impacting the security of people working
and visiting Federal buildings, we are holding our second
hearing related to the Old Post Office.
The Office of Management and Budget just approved the first
round of high-value properties to be sold under historic and
bipartisan legislation this committee drafted, the Federal
Assets Sale and Transfer Act. But instead of focusing on that,
we are questioning a project that turned a money-losing asset
into a money-making asset for taxpayers, which was--I think
that is about $9 million a year in savings.
GSA, along with other agencies, had facilities damaged in
many of the disasters that happened across the country in
recent years. Where are they in fixing and repairing them? Why
is that not a focus today?
And instead of ensuring all GSA employees are focused on
these and other critical issues, many of the GSA employees have
had to spend their time responding to the majority's document
requests, which can best be described as a partisan fishing
expedition.
Let's be clear. GSA has produced over 10,000 pages of
documents in response to Democratic requests, over 30,000 if
you include the FBI Headquarters project document requests.
Despite GSA providing rolling document productions following
our hearing in September, the chair felt compelled to issue a
subpoena. In response, GSA offered this committee an
opportunity to go to the GSA and review the financial records
submitted for the Old Post Office for oversight purposes.
This committee has had a longstanding bipartisan respect
for the sensitivity of certain information, such as
procurement-sensitive and proprietary business information. We
know this information, if disseminated, can harm the interests
of the taxpayer, as it would result in lower competition, and
increased costs because of the higher risk of doing business
with the Government.
I agree we have to be able to conduct our oversight. And as
I stated earlier, GSA has invited this committee to view the
financial records for this purpose. But the majority would not
take up GSA on this offer because the committee would not agree
to one simple term, to not publicly disclose any of the private
financial information obtained in those documents.
This only confirms what we already know: This is not a
legitimate exercise of the committee's oversight authority, but
rather an abuse of that authority to harm the President,
politically.
We spent our September hearing listening to witnesses argue
that the current arrangement at the OPO violates the Emoluments
Clause. And now that there are reports the hotel interest may
be sold, that too, according to Democrats, violates the
Constitution, even before it has happened.
Outleasing, historically, has not only been supported by
Congress, but encouraged. The Public Buildings Cooperative Use
Act of 1976 and section 111 of the National Historic
Preservation Act were intended to encourage commercial,
cultural, recreational, and other activities in Federal
buildings. The OPO lease itself was directed by Congress in
legislation.
Are there valid issues we may want to examine with respect
to outleases, going forward? Of course.
There are many other issues we should be addressing here
today. I hope today we can not only look at outleasing going
forward, but other critical issues related to public buildings.
[Mr. Pence's prepared statement follows:]
Prepared Statement of Hon. Greg Pence, a Representative in Congress
from the State of Indiana
GSA has accomplished a lot in recent years--across its portfolio,
GSA saved federal agencies $7 billion just in fiscal year 2019 alone.
The DOT headquarters purchase will realize significant savings over the
long term. And, GSA was a part of the team to help stand up the Public
Building Reform Board pursuant to the Federal Assets Sale and Transfer
Act (FASTA) which will realize billions of dollars in savings in the
sales of unneeded federal property.
But, once again, instead of focusing on critical issues like those
I mentioned or our crumbling infrastructure, we are here today focusing
on bashing the President. We have other business before this
subcommittee that is critical to the American taxpayer, including
issues that fall under the purview of the GSA Administrator.
For instance, Ranking Member Meadows and I introduced legislation
that would give GSA some of the tools needed to address the avalanche
of expiring leases. We spend over $5 billion a year on leasing space.
We should be focused on what we can do to ensure these leases are
replaced with good deals and reduce the costs.
We also have bills pending before this subcommittee to pilot the
use of public-private partnerships to help address the backlog of GSA
projects. We should be focused on solutions to address the backlog of
GSA's capital projects, so we are not forced to resort to leasing
because we cannot afford to do anything else.
The Federal Protective Service (FPS) is responsible for securing
GSA's facilities. There is a reorganization happening right now
involving FPS. But, instead of focusing on how this reorganization may
be impacting the security of people working and visiting federal
buildings, we are holding our second hearing related to the Old Post
Office.
Office of Management and Budget just approved the first round of
high value properties to be sold under historic and bipartisan
legislation this committee drafted--the Federal Asset Sale and Transfer
Act (FASTA). But, instead of focusing on that, we are questioning a
project that turned a money-losing asset into a money-making asset for
the taxpayer.
GSA, along with other agencies, had facilities damaged in many of
the disasters that happened across the country in recent years. Where
are they in fixing and repairing them? Why is that not a focus today?
And, instead of ensuring all GSA employees are focused on these and
other critical issues, many of the GSA employees have had to spend
their time responding to the Majority's document requests which can
best be described as a partisan fishing expedition.
Let's be clear--GSA has produced over 10,000 pages of documents in
response to Democratic requests--over 30,000 if you include the FBI
Headquarters project document requests. Despite GSA providing rolling
document productions, following our hearing in September, the Chair
felt compelled to issue a subpoena. In response, GSA offered this
committee an opportunity to go to GSA and review the financial records
submitted for the Old Post Office for oversight purposes.
This committee has had a long-standing, bipartisan respect for the
sensitivity of certain information, such as procurement sensitive and
proprietary business information. We know this information, if
disseminated, can harm the interests of the taxpayer, as it would
result in lower competition and increased costs because of the higher
risk of doing business with the government.
I agree we have to be able to conduct our oversight, and as I
stated earlier, GSA has invited this committee to view the financial
records for those purposes. But the Majority would not take up GSA on
that offer because the Committee could not agree to one simple term--to
not publicly disclose any of the private financial information
contained in those documents. This only confirms what we all already
know: this is not a legitimate exercise of the Committee's oversight
authority but rather an abuse of that authority to harm the President
politically.
We spent our September hearing listening to witnesses argue that
the current arrangement at the OPO violates the Emoluments Clause, and
now that there are reports the hotel interest may be sold, that too,
according to the Democrats, violates the Constitution.
Outleasing historically has not only been supported by Congress,
but encouraged. The Public Buildings Cooperative Use Act of 1976 and
Section 111 of the National Historic Preservation Act were intended to
encourage commercial, cultural, recreational and other activities in
federal buildings. The OPO lease itself was directed by Congress in
legislation.
Are there valid issues we may want to examine with respect to
outleases going forward? Of course. But, in the $9 billion GSA Federal
Buildings Fund, outleases account for less than 0.3% of the funds.
There are many other issues we should be addressing here today,
especially with the GSA Administrator joining us. I hope today we can
not only look at outleasing going forward but other critical issues
related to public buildings.
Mr. Pence. I yield back the balance of my time. Thank you.
Ms. Titus. I would now recognize Mr. DeFazio for 5 minutes,
chairman of the Transportation and Infrastructure Committee.
Mr. DeFazio. Well, I thank the chair. And in response to my
colleague, who just spoke from the minority side, we wouldn't
be holding a second hearing here today if GSA had followed the
recommendations of its own internal watchdog, the Office of
Inspector General, that concluded the GSA failed to consider
the Emoluments Clause when evaluating the lease. And we
wouldn't be here today if they were recognizing the legitimate
oversight authority of this Congress.
Now, what we are here about is the Constitution of the
United States of America, and that is pretty damn important. It
doesn't matter who is President. Your President, my President,
anybody.
But in this case, we would like to see the so-called legal
memorandum that concluded that this lease does not violate the
Emoluments Clause of the Constitution of the United States of
America. And as I said, the OIG said it wasn't considered. They
apparently have seen the secret legal memorandum, which we are
not being allowed to see, that somehow concludes that either
the President of the United States is not an elected official,
or is not benefiting from the lease. Now, I don't know which of
those two conditions it is, but it seems that that is a
problem.
Now--and the gentleman carried on at some length about us
reviewing in camera the financial documents with a restriction
that, in exercising our legitimate oversight authority to see
whether or not the taxpayers in the United States are being
made whole under this lease, that we would be bound to secrecy
after viewing them.
Now, I think the gentleman has sat through some of the
hearings with Boeing. Even Boeing, a private for-profit
company, didn't try and impose such a restriction on us. In
this case we are talking about the Government of the United
States of America, a Federal agency, trying to impose such a
restriction on us. That is outrageous, absolutely outrageous.
The only thing we have gotten from GSA that is meaningful
is a letter that they forwarded from an attorney for the Trump
Organization in terms of why GSA wouldn't comply with the
records request. That is a bit odd. It isn't even from the
legal counsel at GSA. I think they do have attorneys. In fact,
they have some sort of legal analysis, maybe, about this lease
which we can't see. But that letter, forwarded by GSA,
questions our oversight jurisdiction, our legitimate need for
financial records.
So the question is, who is GSA serving here, Trump LLC or
the people of the United States of America? That is why we are
here today.
Now we are confronted with something of even greater
import, which is the potential sale of this lease. Let's just
say that Vladimir Putin or one of his oligarch friends decides
to buy the hotel for an outrageous price. Wouldn't that be
interesting? Oh, well, what if it is the Chinese or what if it
is bin Salman, who apparently helps hack phones of individuals
who the administration doesn't like?
Will there be a security review of this lease? Will the GSA
refer it to CFIUS? Because Congress has said buildings that are
to be leased by the Government in proximity to sensitive
institutions, military bases, et cetera--and this is pretty
darn sensitive--it is across the street from the FBI, it would
be a great place to do surveillance. Is GSA going to go through
a full CFIUS process? We will be asking those questions later
in this hearing.
We also asked GSA to conduct an audit. We asked last
September, ``Would you audit?'' And GSA has yet to respond to
that.
So the gentleman wonders why we are here today. We are here
today to protect the interests of the people of the United
States of America, the taxpayers of the United States of
America, and the Constitution of the United States of America.
That is why we are here today, no matter who is President.
[Mr. DeFazio's prepared statement follows:]
Prepared Statement of Hon. Peter A. DeFazio, a Representative in
Congress from the State of Oregon, and Chairman, Committee on
Transportation and Infrastructure
Thank you, Chair Titus, and thank you, Administrator Murphy for
making your first appearance before this Committee.
We are here today because of GSA's failure to act. The General
Services Administration (GSA), under successive Administrations, failed
to properly consider the Emoluments Clauses to the U.S. Constitution
when evaluating the Old Post Office (OPO) lease to the Trump
International Hotel.
But only under this Administration did this lease present what
seems to be a clear violation of the U.S. Constitution.
The GSA's own internal watchdog, the Office of Inspector General
(OIG), concluded that GSA failed to consider the Emoluments Clauses
when evaluating this lease.
The IG recommended that GSA revise its leasing language to ensure
GSA is abiding by the laws of our Nation, including the supreme law of
our nation, the U.S. Constitution. Once again, the GSA chose not to act
by refusing to implement the IG's recommendation.
In October, I issued a subpoena to GSA for copies of legal memos
and financial data regarding the Old Post Office lease to the Trump
International Hotel that GSA has refused to provide to the Committee
for over one year now. Once again, GSA failed to act.
They have outright refused to provide the Committee with legal
memos related to the Trump Hotel, and while we engaged in good faith
efforts to review the financial data in-camera, GSA wanted us to grant
them veto power over our ability to reference or release any of this
data publicly if we believed it served a legitimate oversight need of
the Committee and was in the public's interest.
What's interesting is that GSA appears to be mimicking arguments
made by the Trump Organization. In fact, the GSA provided the Committee
with a copy of a letter that an attorney for the Trump Organization
sent GSA about complying with the Committee's original records request.
That letter questioned the Committee's oversight jurisdiction and our
legitimate need for financial records. This leads me to question whose
interests GSA is serving--the Trump Organization or the American
public?
So, I am happy that Administrator Murphy has agreed to be here to
help us understand why GSA appears more concerned about protecting the
personal interests of the President of the United States than the
financial interests of U.S. taxpayers.
But this is not the only reason we have invited the GSA
Administrator here today. We expect Administrator Murphy to answer
questions about the potential sale of the Old Post Office lease.
Exactly a month after our last hearing on the Old Post Office lease
in September of last year, and three years after the Trump
International Hotel grand opening, media reports surfaced that the
Trump Organization was interested in selling their lease with GSA.
The sales brochure for the hotel says, ``potential exists for a new
owner to fully capitalize on government related business.'' It sounds
like they're speaking from experience.
Meanwhile, the Trump Organization claims that their refusal to
solicit foreign business has cost the hotel over $9 million. That's a
pretty specific number considering we can't seem to get any other
financial performance data related to the hotel.
The lack of transparency and cooperation by GSA with the
Committee's legitimate oversight authority over the past three years is
ridiculous.
In October, Chair Titus and I requested that GSA conduct an audit
of the Old Post Office lease, which they had acknowledged had not been
done. Three months later we are still waiting on a response to that
request.
In addition, I have serious concerns about how GSA administers its
outleasing program. While there are extensive regulations for how GSA
should acquire leased space, there seem to be very few formal rules
outlining how the government should lease property to private parties.
Further, since a lessee's compliance with a lease is determined by a
Lease Contracting Officer, I'd like to know what processes are
available to review that decision.
I hope we can make some progress today, Administrator Murphy, and
get you to commit to working with this Committee to ensure GSA is
properly managing its outleasing program so that we can ensure it is
being managed effectively, efficiently and ethically moving forward.
Thank you. I look forward to your testimony. I yield back.
Mr. DeFazio. I yield back the balance.
Ms. Titus. Thank you, Mr. Chairman. I recognize Mr. Graves
for an opening statement.
Mr. Graves of Missouri. Thank you, Chairwoman Titus, and I
want to thank the Administrator for being here today.
Normally, when we invite the heads of an agency to testify,
it is to discuss critical issues facing the agency itself. But
today, here we are. We called the Administrator in to focus
primarily on one project, the Old Post Office, and outleases
generally, which account for less than 1 percent of all that
GSA manages.
As was pointed out, under this Administrator's leadership,
GSA has saved the Federal agencies and taxpayers more than $7
billion in 2019. And GSA has closed the deal on the purchase of
the DOT Headquarters building; it has managed major renovations
at land ports of entry. GSA's role in implementing the Federal
Assets Sale and Transfer Act is going to save billions by
selling and redeveloping underused Federal assets.
You know, this is the second hearing on the Old Post
Office, a project now being criticized because of the lease and
the terms in the lease, and the project was directed by
Congress through Democratic legislation, and awarded and
negotiated under a Democratic President. And yet, here we are,
trying to slam this President for things that are in a lease
done under the last administration. And it is unfortunate that
the desire to impeach the President runs so deep that even
issues related to public buildings have become partisan.
You know, we may from time to time disagree on projects and
priorities, but ultimately our goals have been the same: to
ensure that GSA is a good steward of the taxpayer dollars. And
after thousands of documents produced, and the offers by GSA to
make accommodations for the committee to review those requested
financial records for the OPO--which, by the way, have yet to
be taken up by the committee--the majority still accuses the
GSA of obstruction.
And for what? Because the Democrats claim that the lease is
going to violate the Emoluments Clause, which is an unsettled
area of the law, which should be sorted out through the courts,
and not by us here.
So let's get back to real work. With all the time and
effort that is put into investigating this one lease, we could
have worked together to develop solutions to some of the
critical issues that are facing management of our public
buildings and other infrastructure, for that matter, throughout
this country. I hope we can talk about some of those other
pressing issues and the good work that the Administrator is
doing since coming on board.
[Mr. Graves of Missouri's prepared statement follows:]
Prepared Statement of Hon. Sam Graves, a Representative in Congress
from the State of Missouri, and Ranking Member, Committee on
Transportation and Infrastructure
Normally, when we invite the head of an agency to testify, it's to
discuss critical issues facing the agency. But, today we have called
the Administrator to focus primarily on one project--the Old Post
Office--and outleases generally, which account for less than one
percent of all that GSA manages.
Under Administrator Murphy's leadership, GSA has saved Federal
agencies and the taxpayer more than $7 billion in FY2019. GSA has
closed the deal on the purchase of the DOT Headquarters building, is
managing major renovations at land ports of entry, and GSA's role in
helping to implement the Federal Assets Sale and Transfer Act will save
billions by selling and redeveloping underused federal assets.
This is our second hearing on the Old Post Office--a project
directed by Congress through Democratic legislation and awarded and
negotiated under a Democratic President. It is unfortunate that the
desire to impeach this President runs so deep that even issues related
to public buildings have become partisan.
We may from time to time disagree on projects or priorities, but
ultimately, our goals have been the same--to ensure GSA was a good
steward of the taxpayer dollar.
There are important issues that we should be asking the GSA
Administrator about today. GSA has more than 50% of its leases expiring
in the next 5 years, there is a backlog of construction and repair
projects, and there are ongoing security issues at federal facilities.
We should be focused on working with GSA on addressing those and other
issues.
While GSA is trying to deal with expiring leases and backlogs in
repair projects, GSA has also had to juggle what seems to be never-
ending document requests. After thousands of documents produced and
offers by GSA to make accommodations for the Committee to review
requested financial records for the OPO, the Democrats still accuse GSA
of obstruction. And for what? Because the Democrats claim the lease may
violate the Emoluments Clause--an unsettled area of law which should be
sorted out through the courts not by us here in Congress.
Let's get back to real work. With all the time and effort put into
investigating this one lease, we could have worked together to develop
solutions to some of the critical issues facing management of our
public buildings and other infrastructure. I hope today we can talk
about some of those other pressing issues and the good work the
Administrator has been doing since coming on board.
Mr. Graves of Missouri. And with that I would yield back.
Ms. Titus. The gentleman yields back. We would now like to
welcome our witness, the Honorable Emily Murphy, Administrator
of U.S. GSA.
We are glad to have you here today. We look forward to your
testimony. As you can see, we are anxious not only to learn
about what has happened, but, going forward, what will happen
with the sale of the lease.
Without objection, our witness' full statement will be
included in the record.
Since your written testimony has been made part of the
record, the subcommittee requests that you limit your oral
testimony to 5 minutes. So please go ahead. Thank you very
much.
TESTIMONY OF HON. EMILY W. MURPHY, ADMINISTRATOR, U.S. GENERAL
SERVICES ADMINISTRATION
Ms. Murphy. Thank you. Good morning, Chairwoman Titus,
Ranking Member Pence, Chairman DeFazio, and Ranking Member
Graves, and members of the subcommittee. Thank you for the
opportunity to testify.
It is actually a particular honor for me today, because I
get to testify in front of my former boss, Mr. Graves.
GSA's mission is delivering value and savings in real
estate acquisition, technology, and other mission support
services across Government. I am proud to say that, in my 2
years as Administrator, we have saved Federal agencies $14.5
billion. We were able to do this while improving the agency
culture, and saw our ``best places to work'' rating improve to
its highest score ever.
Our success is based on our partnership with suppliers,
customer agencies, and Congress. This subcommittee and GSA have
worked together to more efficiently and effectively manage
GSA's 368 million square feet of office space. This is saving
taxpayers billions of dollars.
While I will talk about GSA's document production, I do
hope I will be able to discuss some of GSA's major initiatives.
It is crucial that we work together to invest in GSA's own
portfolio, and address our repair and maintenance backlog.
First, GSA has provided the vast majority of what this
committee has asked for. Regarding the OPO lease, GSA has
provided more than 3,700 documents, totaling more than 10,000
pages. This is only part of the 7,000 documents and nearly
30,000 pages GSA has provided to this committee since I became
Administrator in December of 2017.
With regard to the document requested regarding the OPO
lease, it is my understanding the GSA has provided all
documents, with two exceptions.
The first category includes confidential financial records
provided by the tenant pursuant to the terms of the lease.
Prior to October 24th, GSA was unable to provide those
materials without violating the terms of the lease. However,
following the receipt of the committee's subpoena on November
12th, GSA offered to make the unredacted records available for
the committee's review, provided the committee agreed not to
publicly disclose the information contained within the records
without GSA consent.
The purpose of this condition was not to resist
congressional oversight, but rather to preserve the
confidentiality of proprietary information provided by those
who seek to do business with the Government. If tenants and
suppliers come to believe the GSA will not protect their
confidential information, then it will be much more difficult
and expensive for GSA to acquire space, goods, and services for
our Federal customers.
While the committee has not yet agreed to those terms, I am
hopeful you will soon agree, as our offer to view the documents
still stands.
Second, GSA has not produced agency legal opinions
regarding the OPO lease. These documents are highly
deliberative in nature, and contain attorney-client
communications that implicate core confidentiality interests of
the executive branch. It is a longstanding practice of multiple
administrations of both parties to protect the confidentiality
of legal advice.
In the meantime, GSA is investing in its own real estate,
most notably by modernizing and expanding land ports of entry
on the northern and southern borders. Two such active projects
are the expansion of the land port of entry in Alexandria Bay,
New York, and in Calexico, California. Congress has recently
funded phases of these projects and passed the USMCA. This
makes it especially important that GSA-controlled LPOEs on both
of our borders are modernized for the future.
Additionally, GSA will be working with this committee to
address more than 100 million square feet of expiring leases in
the next 5 years. These are worth more than $60 billion. We
cannot let this opportunity for savings slip past us.
Finally, there is a significant issue that harms GSA's
ability to invest in its existing buildings and construct new
facilities. GSA lacks the ability to access the full revenues
collected in GSA's Federal Buildings Fund.
GSA charges Federal agencies rent for the space they use,
and then deposits that rent into the FBF. Congress exercises
control through the appropriations process. It sets annual
limits on how much of the fund balance GSA can spend. Since
2010, GSA hasn't been allowed to spend what we have collected.
As a result, the balance in the Federal Buildings Fund has
continued to grow, and is now more than $8 billion.
At the same time, we have a $7 billion backlog for repairs
and alterations. This backlog will only get worse. The average
GSA building is over 50 years old. Our aging buildings can be
valuable assets for decades to come, but not if we fall behind
on needed repairs and alterations. To address this vital issue,
I would ask that members of the subcommittee advocate for full
funding of GSA's forthcoming FBF request. This will allow GSA
to make critical maintenance and repair investments in existing
infrastructure, as well as to construct new facilities,
allowing the Federal Government to better carry out its
mission.
With that, I again thank the committee for their time
today, and welcome any questions.
[Ms. Murphy's prepared statement follows:]
Prepared Statement of Hon. Emily W. Murphy, Administrator, U.S. General
Services Administration
Good morning Chairwoman Titus, Ranking Member Meadows, and Members
of the Subcommittee. My name is Emily Murphy, and I am the
Administrator of the U.S. General Services Administration (GSA). I am
here today to discuss GSA's congressionally-mandated outlease of the
Old Post Office Building (OPO) and GSA's responses to document requests
from the Committee.
I would first like to thank Chairwoman Titus and Members of this
Subcommittee for the invitation to appear before you this morning. This
is my first time testifying before the Subcommittee since I became
Administrator in December 2017.
GSA's mission is delivering value and savings in real estate,
acquisition, technology, and other mission-support services across
government. I am proud to say that in fiscal year 2019 alone GSA was
able to save Federal agencies more than $7 billion, allowing agencies
to dedicate those resources to mission needs. Moreover we were able to
do this while improving the agency culture and saw our ``Best Places to
Work in the Federal Government'' rating improve to 75.6, our fifth
straight year of improvement and the agency's best rating ever. This
rating places GSA second across all of government for agencies with
more than 6,000 employees, only behind the National Aeronautics and
Space Administration.
Vital to our success over the last several years are the
partnerships our agency has built with suppliers, customer agencies,
and Congress. As you know, this Subcommittee and GSA have had a long
and productive partnership, under both Democratic and Republican
leadership, which has resulted in more efficient and effective
management of GSA's federally owned and leased portfolio. This
collaboration has resulted in GSA optimizing and rightsizing our owned
and leased portfolios, saving the taxpayer billions of dollars. This
has allowed Federal agencies to invest more resources into core agency
missions and related activities, instead of real estate.
Later in my testimony, I will discuss two current GSA initiatives
that I believe the Subcommittee and GSA can work on together to deliver
increased value to federal agencies: investing in GSA's owned-portfolio
and restoring funding to address GSA's pressing need to address a
growing repair and maintenance backlog.
As you may remember, Dan Mathews, the Commissioner of GSA's Public
Buildings Service (PBS), testified before you last September. As part
of his testimony, he provided a narrative timeline of the OPO lease.
While I am happy to answer questions about the timeline today, in the
interest of time, I would like to focus my opening statement on GSA's
efforts to accommodate the Committee's interest in this topic, as well
as on the challenges and opportunities facing both GSA and this
Committee.
First, GSA has provided the vast majority of what the Committee has
asked for with regard to the OPO related requests. As of today, GSA has
provided more than 3,700 documents totaling more than 10,000 pages on
this topic alone, which is only a part of the more than 7,000 documents
and nearly 30,000 pages GSA has provided to this Committee on numerous
topics since I became Administrator in December of 2017.
With regard to the OPO requests, it is my understanding that the
only outstanding documents fall into two categories. In the first
category are agency legal opinions regarding the OPO lease. These
documents are highly deliberative in nature and contain attorney-client
communications that implicate core confidentiality interests of the
Executive Branch. It is the long-standing practice of multiple
Administrations of both parties generally not to disclose internal
legal advice, especially in the absence of any articulation of a
particularized congressional need.
The second category includes confidential financial records
provided by the tenant pursuant to the terms of the lease. Prior to
October 24, 2019, GSA was unable to provide those materials without
violating the terms of the lease. However, following receipt of the
Committee's subpoena, GSA offered on November 12, 2019, to make the
unredacted records available for the Committee's review, provided the
Committee agreed not to publicly disclose the information contained
within the records without GSA's consent.
The purpose of the condition on GSA's offer was not to ``resist''
congressional oversight, but rather to preserve the confidentiality of
proprietary information provided by those who seek to do business with
the government. If tenants and suppliers come to believe that GSA will
not protect their confidential data, then it will be much more
difficult--and expensive--for GSA to acquire space, goods, and services
for our federal customers. While the Committee has not yet agreed to
these terms, I am hopeful you will agree soon, as our offer to view the
documents still stands.
Turning to the two initiatives I mentioned earlier, GSA is making
strategic investments in its owned real estate portfolio of more than
1,600 assets, such as modernizing and expanding land ports of entry
(LPOEs) on the northern and southern border. Two specific projects that
I would like to bring to the Subcommittee's attention are the expansion
of the Alexandria Bay LPOE in Upstate New York and the Calexico West
LPOE in Southern California.
Now that Congress has recently funded specific phases of these
projects, as well as passed the United States-Mexico-Canada Agreement,
it is important that GSA controlled LPOEs on the northern and southern
border are modernized and sustainable for the future. This will ensure
that our partners at U.S. Customs and Border Protection, the Food and
Drug Administration, and the U.S. Department Agriculture--just to name
a few--will have state of the art facilities that promote legal trade,
tourism, and commerce with our North American partners.
GSA's leased portfolio consists of more than 8,000 leases equating
to almost 200 million rentable square feet of space. Leasing represents
more than half of PBS's total expenditures and 66 percent of those
leases are due to expire during the next five years. That's more than
100 million square feet of leased set to expire. The lifetime contract
value of these leases is about $60 billion dollars. Over the next few
years, GSA will work closely with this Subcommittee, through the lease
prospectus process, to cut billions of dollars from that figure by
negotiating longer firm terms with lessors in order to secure lower
rental rates, concessions, and other discounts.
Finally, I would like to highlight to the Subcommittee an issue
that continues to negatively impact GSA's ability to invest in its
existing buildings and construct new facilities--not providing GSA the
authority to access and spend all of the revenues collected in the
Federal Buildings Fund (FBF).
The FBF is an intra-governmental fund authorized and established by
Congress that is subject to annual spending limits as part of the
appropriations process. Beginning in 1975, the FBF replaced direct
appropriations from Congress as the primary means of funding the
operating and capital costs associated with public buildings under the
custody and control of GSA. Specifically, GSA charges federal agencies
rent for space they occupy in GSA-owned or leased facilities and
deposits those funds into the FBF. Congress then exercises control over
the FBF through the appropriations process, by setting annual
obligational limits on how much of the fund can be expended for various
activities.
Since FY2010, total deposits and collections into the FBF have
substantially exceeded the amounts Congress has allowed GSA to spend.
As a result, the year-over-year fund balance in the FBF has continued
to grow and now exceeds $8 billion, forcing GSA to delay repairs on
dozens of buildings. In recent years, this problem has grown even more
acute with GSA receiving nearly $4.4 billion less than it has requested
over the last four fiscal years.
This funding shortfall has most severely impacted the backlog of
GSA's capital investment needs over the same time period: GSA now has a
backlog of $1.93 billion in immediate repairs needed to restore or
maintain a building's acceptable condition. Only approximately half of
GSA's requested projects have received full or partial funding over the
last three years. The impact of this shortfall will only continue to
grow unless Congress takes action since GSA operates and maintains a
portfolio of over 1,600 federally owned assets, in which the average
building age is more than 50 years. Furthermore, historic assets,
meaning those listed or eligible for listing on the National Register
of Historic Places, comprise 25 percent of GSA's portfolio. As
appropriation allowances continue to fall below the amount of rent
collected, GSA is forced to defer critical repairs, suspend capital
reinvestment, and forego new construction and consolidation
opportunities.
I would ask that Members of this Subcommittee support and advocate
for GSA's annual budget request to be able to spend projected FBF
collections. This will allow GSA to make critical maintenance and
repair investments in existing infrastructure, as well as construct new
facilities, allowing the Federal government to better carry out its
mission.
With that, I again thank the Committee for their time today and
welcome any questions.
Ms. Titus. Thank you very much. We appreciate the
testimony. We will now move on to Member questions. Each Member
will be recognized for 5 minutes, and I will start by
recognizing myself just to ask some questions. Going forward, I
want to focus on going forward.
In October, Eric Trump, who is your boss' son, confirmed
that the Trump Organization was considering selling their lease
of the Old Post Office Building here in Washington that your
agency oversees. According to marketing material obtained by
the Washington Post, last Thursday was the deadline for initial
proposals to purchase the 60-year lease from the Trump
Organization, which had hopes to sell for as much as $500
million, as I mentioned.
So I would ask you, has the Trump Organization shared with
GSA the names of potential buyers of the lease?
Ms. Murphy. To the best of my knowledge no, they have not.
Ms. Titus. Section 15.3 of the lease allows for the owner
of the lease to sell it to a ``qualified transferee.'' Can you
tell us what a qualified transferee is? What does that mean?
Ms. Murphy. So, under section 15 of the lease, there is a
seven-part test for qualified transferee. It goes towards the
character of the party. It goes towards their financial
responsibility, their ability to actually pay us the rent,
their past history of maintaining historic property.
I would be happy to provide you with the clause----
Ms. Titus. Can I ask how GSA is going to evaluate the
potential leases or lessees, or will you do this for the whole
list of them, if they give you three or four that might be
potentially qualified?
Just what do you consider as you come to the determination
that they are qualified?
You heard the chairman mention--could the Saudi Arabian
Crown Prince qualify? He has about a $500 million yacht and a
$300 million French chateau. It sounds like, by what you just
listed, he might be considered a qualified transferee. Or the
China Construction Bank, for example, might be able to make a
profit, and they could apply to purchase it. Could you give us
an answer of how you consider applicants like that?
Ms. Murphy. So I want to answer the first part of your
question first, which was do we anticipate that we are going to
get a slew of offers to evaluate. And right now we don't know
if we are going to get a single offer to evaluate. That is
going to be up to the tenant, once they have completed their
negotiations. At that point in time they would give us who they
are proposing as a qualified transferee. Only at that time
would GSA's role begin.
So, at this point in time, anything would be hypothetical.
That said, you know, not knowing what offer we are going to
get, it is very hard for me to give you a hard and fast ``we
are going to do this or this.'' We are going to evaluate the
offer we get, and we are going to do the right thing with that
offer.
Ms. Titus. So they make the first determination, they give
you the name of their potential buyer, and that would be the
one you would evaluate?
Ms. Murphy. That is correct, ma'am.
Ms. Titus. The Constitution explicitly forbids the
President from accepting emoluments or payments from foreign
entities. Would you rule out any foreign entities as an
applicant, if that is what is presented to you?
Ms. Murphy. So at this time--I want to be very careful in
answering this question, because there is litigation pending on
the Emoluments Clause. It was filed before I ever began at GSA,
and the Department of Justice has ruled that--it is publicly
stated and argued that there is not an emolument at this point.
Given that I do not know what the offer is going to be, I
don't want to make a judgment on that. It would be very
improper for me to weigh in on the Emoluments Clause.
That said, this is going to be my first time of having that
issue come before GSA when I have been in charge. And we are
going to do the right thing.
Ms. Titus. Well, let's just take this away from the Post
Office and talk about future outleasing. Do you think it is
appropriate to outlease Federal buildings to foreign entities?
Ms. Murphy. I think that we would--under the current laws,
we would have to--we have to follow the current requirements
that are in place for--in title 4041 on how we are handling our
leasing.
I am unaware of any leases we have with foreign entities at
this time, and I know that we would want--that is going to be
governed by the terms of our leases themselves.
Ms. Titus. Who in your agency is responsible for doing this
evaluating?
Ms. Murphy. Of this specific lease, or in general?
Ms. Titus. Well, either--both, either. Is it a contracting
officer?
Ms. Murphy. For any specific lease, any individual lease,
it is the contracting officer who is vested with that authority
by law.
As we look at policies across the General Services
Administration, we have an Assistant Commissioner for leasing
who reports to the Federal Buildings Commissioner. And we
ensure we work with them to make sure we have got the right
policies in place with General Counsel's Office, with other
support offices.
Ms. Titus. Does the general counsel--does the GSA general
counsel get involved in that?
Ms. Murphy. So the general counsel in the prior
administration got involved in December of 2016, and that was
the individual--so it was the Obama administration's general
counsel who made the decision not to go to the Department of
Justice on----
Ms. Titus. I am talking about the future selling of the
leases, not the past. Let's talk about the future.
Ms. Murphy. So I think, in the future, we are going to have
whoever we need to be involved in that--in evaluating the lease
involved. We have a--there is a lot of very solid career
attorneys in GSA.
Ms. Titus. So what I am hearing you say is that there
aren't any rules, there aren't any guidelines. Anybody is
eligible to apply. And you will worry about that down the road
because nothing is in place.
Ms. Murphy. No. What I am saying, ma'am, is that the lease
itself governs how I act.
Ms. Titus. But can the lease be changed with a new tenant
when they sell the lease?
Ms. Murphy. We could enter into a bilateral negotiation
with that----
Ms. Titus. Who decides that?
Ms. Murphy. That would, again, be something that we would
need to propose to the tenant, or the tenant could propose to
us. It would be a separate--it is a separate process, though,
from that provision----
Ms. Titus. It seems to me we need to put in place some
guidelines for that consideration, going forward.
My time is up. I now recognize Mr. Pence, but we may come
back to that.
Ms. Murphy. Yes, ma'am.
Mr. Pence. Thank you, Chairwoman Titus.
Administrator Murphy, following our first hearing on the
Old Post Office last year, Chair DeFazio and subcommittee Chair
Titus sent a letter to you in October reiterating their
requests for financial records related to the OPO. According to
your testimony, GSA has provided more than 3,700 documents,
totaling more than 10,000 pages to the committee on this topic.
You continue to explain today that the only outstanding
documents fall into two categories. The first is legal opinion,
and it is the longstanding practice of administrations not to
disclose internal legal advice. And the second category
includes confidential financial records, and that is included
in the lease.
On October 24th, Chairs DeFazio and Titus issued a subpoena
for these documents, the first T&I subpoena issued in almost a
decade. In your testimony you note that, prior to the subpoena,
GSA was unable to provide confidential financial records
without violating the terms of the OPO lease.
I am holding here two letters that you sent in response to
Chair DeFazio and Titus on November 12th and 18th, offering the
committee an in camera review of the requested financial
records, provided the committee does not publicly disclose the
information. And an explanation as to why you had taken that
route.
Administrator Murphy, am I correct in my understanding that
GSA offered not once, but twice, to set a time for the
committee to review the relevant financial records?
Ms. Murphy. Actually, Congressman, it is more than twice,
because there were also phone calls between the respective
staffs where we have made that offer. And it is an outstanding
offer. We would be very happy to have the committee come in and
review those records pursuant to those conditions.
Mr. Pence. So I think you just answered my next question.
Did any member of the committee take you up on that offer?
Ms. Murphy. No, sir.
Mr. Pence. OK. Is the offer still open to come and review--
--
Ms. Murphy. Yes, sir.
Mr. Pence [continuing]. The financial information that----
Ms. Murphy. Yes.
Mr. Pence [continuing]. We have been discussing in this and
the previous hearing?
Ms. Murphy. Yes, sir.
Mr. Pence. In your testimony you said--and I quote--``GSA's
offer was not to resist congressional oversight, but rather to
preserve the confidentiality of proprietary information.'' Can
you explain why the GSA--and you touched on it a little bit--
takes this position, and why the security of this information
is important?
Ms. Murphy. So, sir, we have 68 billion contracts. We have
another 8,000 leases and 600 outleases. If the parties that we
are entering into contracts with can't trust us to live up to
our side of the bargain, then they are not going to do business
with us. And I am a firm believer that competition is good. And
so I want to make sure that we are creating at GSA an
environment where we do the right thing, we live up to our
obligations under the contracts, and that we are encouraging
competition, so that we get the best results for the taxpayer.
Mr. Pence. So you have a contractual obligation here to not
share that information. But how could releasing that
information make it more difficult to do business with GSA?
Ms. Murphy. Well, because I think that if our tenants and
other contractors see that we are not as good as our word, not
living up to the bargain that was struck in 2012, they are not
going to want to do business with us in the future. They will
walk away from doing business with GSA.
Mr. Pence. And to go and change an existing arrangement
such as this would require both parties to agree to that
change. Is that correct?
Ms. Murphy. Yes, sir. I believe Chairman DeFazio referred
to a letter that was sent to this committee. The reason that
letter was sent was because GSA, prior to the issuance of the
subpoena, had actually asked the tenant organization to consent
to disclosure, which was one of the ways we could disclose
those documents under the lease. They declined to do so, and we
shared that information with the committee in an attempt to be
transparent.
Mr. Pence. So as a person that has been involved for
decades in real estate, I can relate to what you are saying
about--if I strike a deal with another party, I really don't
want that deal shared with just anybody. Or even if I am going
to bid on something, I think it is improper that my offer or my
terms and agreement are just shared with the public, as well.
So I support the position that GSA has. I think it is good
business practice. It is a way to carry forward in the future,
as well.
Thank you, and I yield back.
Ms. Titus. The gentleman yields back. Just to follow up on
that, you mentioned how many leases you oversee. How many of
those are outleases? How many of those are outleases to elected
officials? And how many of those outleases involve foreign
governments?
Ms. Murphy. I believe we have a little over 600 outleases,
that they are worth a total of $28 million. I think only five
or six of them are for more than 20 percent of a building. So
there----
Ms. Titus. Five or six?
Ms. Murphy. Yes, the--that is the vast majority of the
dollars. The majority of our outleases are for parking spots.
Ms. Titus. And how many are to elected officials?
Ms. Murphy. So the only one that I know that could be
construed as to an elected official is the one we are
discussing today.
Ms. Titus. And do any of those involve foreign governments?
Ms. Murphy. Not that I am aware of, ma'am, but I----
Ms. Titus. OK, so this is an unusual circumstance. I think
we need to point that out.
Mr. DeFazio?
Mr. DeFazio. Thank you, Madam Chair. We had, at the earlier
hearing, revealed correspondence between the contracting
officer and the President's daughter. And in one of them, in
mid-November, just after the election, he basically stated that
there was absolutely no concern about emoluments.
Isn't that a bit unusual, that this unsettled technical
legal issue regarding emoluments and a personal relationship,
or attempt at a personal relationship--getting together for
coffee and other things--isn't that a little bit unusual?
Wouldn't a contracting officer consult with counsel, and
wouldn't a contracting officer act a little bit more at arm's
length from the tenant or the tenant's daughter?
Ms. Murphy. So I believe that the--you are referring to the
email that was in the paper about a fair bit of nonsense, sir.
Is that the one that you are----
Mr. DeFazio. There were a number of--there was an email
exchange----
Ms. Murphy. I want to make sure I am----
Mr. DeFazio. Yes.
Ms. Murphy. Yes. I think that is exactly why we make sure
that our contracting officers work in partnership with our
General Counsel's Office, and with others, to make sure that
they are not operating alone.
I know that the IG has actually reviewed the decisionmaking
process, and found that there was no political interference in
that decisionmaking process. They found that--they disagreed
with the decision December of 2016 to not consult with the
Department of Justice, but that decision was made long before I
joined GSA.
Mr. DeFazio. So you think that the contracting officer, by
stating this before they had an opinion from legal counsel, and
having--attempting to have a more personal relationship with
the tenant is all just sort of normal conduct by GSA?
Ms. Murphy. I wouldn't use those words to construe it, but
I--I mean, my job, as the Administrator, is to make sure that
the decisions themselves are not made in vacuums.
Mr. DeFazio. Right. Would you consider replacing this
contracting officer before the hotel lease is transferred?
Ms. Murphy. So the contracting officer you are referring to
is seven levels down in the organization from me, sir.
Mr. DeFazio. Yes. Well, you would have the authority to
reassign him, I assume.
Ms. Murphy. And my--I think that my doing so, and my
getting involved in micromanaging which contracting officers
are assigned to which projects would be my putting the finger--
you know, putting my finger on the scales, which I have tried
very hard not to do.
Mr. DeFazio. OK. So you are not concerned----
Ms. Murphy. I think that the appropriate place----
Mr. DeFazio. Fine. Fine. You are not concerned by his
conduct.
Let's move on to the foreign ownership issue. In 2018,
Congress expanded CFIUS' jurisdiction to include proposals from
foreign purchasers to lease or purchase real estate near
sensitive U.S. Government properties and military
installations.
Would you agree that this hotel is in a sensitive place,
since it is across the street from the FBI?
Ms. Murphy. I would--I want to be careful in my saying that
I believe it is in a sensitive spot, versus whether that meets
the definition of CFIUS. I am not a CFIUS expert.
Mr. DeFazio. Right.
Ms. Murphy. The CFIUS----
Mr. DeFazio. But let's just say your personal opinion.
Ms. Murphy. The CFIUS issue----
Mr. DeFazio. I mean my personal opinion is it is across the
street from the FBI. Kind of what Congress wants here is CFIUS
to review this. Would you ask for a CFIUS review?
Ms. Murphy. If a CFIUS review is warranted, I will ask for
a CFIUS review. Again----
Mr. DeFazio. OK, and under what conditions would it be
warranted?
Ms. Murphy. It is going to depend on what offer--if we
receive an offer from the tenant, which is subject to qualified
transferee, it would depend on what that offer is. So there
are--we are several ifs away from us ever receiving that.
And again, it is not an area, as you pointed out, where it
is GSA's determination. That would be one where we would talk
to the Department of the Treasury----
Mr. DeFazio. OK. If a CFIUS review is initiated, will you
wait until that review--there is a timeline on how long you
have to approve the transfer of the lease. What happens if
CFIUS takes longer than your timeline?
Ms. Murphy. Sir, we are going to do the right thing. You
are asking me about hypotheticals here that haven't even----
Mr. DeFazio. OK. Well----
Ms. Murphy [continuing]. Begun to occur.
Mr. DeFazio. It is a pretty important hypothetical, given
the location.
Now, the gentleman carried on a bit about us reviewing the
records and that. If we had followed your conditions--you, a
Federal agency--regarding this building, we would not have been
able to pursue issues that are very pertinent to the problems
with the death of 346 people in the Boeing MAX, because we
received hundreds of thousands of pages of documents, every
single one of which was stamped proprietary. But we were able
to negotiate with Boeing, a private for-profit entity, that we
could release such documents, and--some of which have led to
some revelations and changes at that company, and potentially
changes in the law.
So you think it is reasonable that we can come in and look
at the books, but we can't talk about it. Even if we find
extraordinary improprieties, we can't talk about it. You think
that is reasonable? Yes or no?
Ms. Murphy. May I----
Mr. DeFazio. No, no, just yes or no. Yes or no. You think
that is reasonable?
Ms. Murphy. I think our offer was a first attempt at
accommodation, and that if we see those documents, it would
then give you--us the ability to further decide whether there
is a way to further accommodate your requirement----
Mr. DeFazio. The----
Ms. Murphy. When I was----
Mr. DeFazio [continuing]. House counsel advised us that
your offer was unacceptable to take that restriction. I just
say that. Now----
Ms. Murphy. When I was a House staffer, I--working for
committees doing oversight, we did accept similar restrictions.
Mr. DeFazio. Right. Now, GSA's watchdog, the OIG, concluded
that you failed to consider the Emoluments Clause when
evaluating the lease, and they recommended that you revisit
this issue. Are you doing that?
Ms. Murphy. So, sir, if I could read you the IG's
recommendation, I think--it is very brief, and I think it is
pertinent. What they recommended was that, before continuing to
use the language, GSA determine the purpose of the ``interested
parties'' provision, conduct a formal legal review by the
Office of General Counsel that includes the Foreign and
Presidential Emoluments Clauses, and then revise the language
to avoid ambiguity.
GSA agreed with that recommendation as a prospective
recommendation for future contracts. What we decided was that
the--based on the IG's research and our research--or based on
the IG's research, that the----
Mr. DeFazio. So you didn't need to revisit it in this case
because of a secret legal document which you also refused to
disclose to the Congress.
Ms. Murphy. Well----
Mr. DeFazio. And how could that--how is it that a
determination on emoluments regarding the President of the
United States and this lease would discourage future
transactions by GSA with private entities? That doesn't make
any sense. I don't think we are going to have another President
who has an outstanding outlease with the GSA. So how can you
say that it is right and proper that you withhold from us this
critical document that determines that the President in this
lease somehow did not violate emoluments?
And the--again, the pertinent language is an elected
official of the United States of America shall not benefit.
Now, he is elected, I think. And I guess he is benefiting. So
why can't we see that document?
Ms. Murphy. So I apologize, but I think you are conflating
the two reasons we are giving.
So we are not providing the financial----
Mr. DeFazio. No, I get that. But you also--there are two
things that are outstanding. You gave us 10,000 pages of
drivel, including, you know, audits by the tenant itself, who
is allowed to self-audit, which even have blacked out the name
of the person who signed the cover letter, which is all we got.
So that is--you know, I just find that unacceptable.
Thank you, Madam Chair.
Ms. Titus. We have allowed a little overtime, so we will
give the same indulgence to you, Mr. Graves, if you have some
questions. Mr.--what happened to Mr. Graves? Oh, well, Mrs.
Miller, then. I am sorry.
Mrs. Miller. Thank you, Chairwoman Titus. And thank you for
being here today.
It is very important to acknowledge that outleasing plays a
crucial role in sustaining long-term historic building
longevity. And it is a critical solution to repairing the
physical condition and futures of these buildings for the
general public, and to the communities where these buildings
are located.
How many historic buildings does the GSA oversee?
Ms. Murphy. We--about one-quarter of our own portfolio is
historic buildings. We have got about 1,600 Federal assets. So
it is a little bit over 400, between 400 and 500 historic
buildings, ma'am.
Mrs. Miller. 400 to 500 very important buildings.
In your opinion, how critical is the outleasing process to
these historic buildings?
Ms. Murphy. So it is absolutely critical, because it allows
us to go into these historic buildings and make sure that
they--the current building we are talking about, we had $200
million in investment that was made in bringing that building
back up to standard so that it will continue to be an asset of
the Federal Government for years to come.
The--and the revenues we are getting from that allow us to
invest in other historic buildings.
Mrs. Miller. Absolutely. We are currently focused on the
big outlease projects like the Old Post Office and the old
Tariff Building. While these outleases are important, can you
describe some of the other various types of outleases that the
GSA oversees?
Ms. Murphy. So our largest category of outleases is
parking. We have also antennas, which really help us provide
rural broadband by having antennas on our roofs. We have credit
unions and coffee shops in our buildings. We allow for some
filming of television shows and movies that take place in some
buildings. I know the Old Custom House in Louisiana, they use
it frequently in ``NCIS: New Orleans,'' I believe. So they--all
of these are ways that we are continuing to make sure that
these buildings are preserved, we have revenue coming in, and,
frankly, it also mitigates against having vacant space in the
Federal portfolio.
Mrs. Miller. Absolutely. In your testimony you mention that
it is the GSA's goal to update and modernize facilities. Are
these GSA facilities on the right track towards completion, and
ready to promote trade, given the impending signing of the
USMCA?
Ms. Murphy. So I think that the two LPOEs I mentioned are
on track. We are going to be at--so we have asked for funding
for both Alexandria--received funding in two phases for
Alexandria Bay and for Calexico. I believe that there is going
to be one more request coming on Calexico West. So those are
moving forward.
I would say, though, that over our entire portfolio, as I
mentioned, we have got a $7 billion backlog for repairs and
maintenance. And it has led to some--in the chairwoman's
district we had a courthouse that didn't have a working fire
alarm for a period of time. Now we have gotten funding now, and
we are addressing that. But just yesterday a pipe burst there.
And so that courthouse is not working again today. And we hope
to have it fixed by the close of business today, but these
repairs are vitally important.
Mrs. Miller. What is keeping you from doing the repairs if
the money is there?
Ms. Murphy. We--our appropriations process is such that,
even though we collect rent, we can't spend the money unless we
are authorized or appropriated those funds again by Congress.
So we have got about an $8 billion surplus in the Federal
Buildings Fund.
Mrs. Miller. It sounds to me like we need to work on that,
as well.
And I will yield back the remaining time to Mr. Pence.
Ms. Titus. You are yielding it to Mr. Pence?
Mr. Pence. To me?
Ms. Titus. Mr. Pence?
Mr. Pence. Just to clarify, so we can go in and take a look
at this agreement, right, and get the specifics, instead of
kind of guess what may or may not be in that, is that correct?
Ms. Murphy. You can--you are welcome to come and see the
financial records. The legal memorandum, no, but the financial
records we are happy to----
Mr. Pence. OK. It is kind of my understanding--I could be
wrong--that Boeing had a nondisclosure agreement which they
waived in their agreement with the Government, and that is why
that information became public.
Let me just be--how often do you have nondisclosure
agreements in leases?
Ms. Murphy. I don't think it is uncommon to have these in
our leases. In fact, there are some that are required by
statute requiring--the Integrity Act and others--that require
we protect that financial information, sensitive business
information of our customers.
Mr. Pence. Last question: When was this lease signed?
Ms. Murphy. 2012, sir.
Mr. Pence. 2012? Thank you. I yield back.
Ms. Titus. Thank you. If Boeing can waive a nondisclosure,
you would think the President of the United States would find
it in the public's interest to do the same, but apparently not.
Who is next?
Ms. Davids would be recognized for 5 minutes.
Ms. Davids. Thank you, Chairwoman.
So I--Administrator Murphy, I just--I wanted to ask you a
bit about the process, and what things will look like, going
forward. I think that the folks in my district really just want
to make sure that we are managing our resources and spending
the taxpayer dollars that they are sending to the Federal
Government well.
And so, as we are getting into this process of the--of
finding a new purchaser for the Trump Hotel and, you know, we
are going to be forward-looking on this, how do you think the
process that you have followed before, that the GSA followed
before, worked? Do you think it was a good process? Do you
think it was effective? Was it a failure? Was it somewhere in
between that?
Ms. Murphy. Are you talking about the 2012 process?
Ms. Davids. I think the whole--the process, as a whole,
whether or not--I guess I am wondering--do you think this has
been a good use of our time and energy?
Ms. Murphy. So I think that we took a building that was
costing taxpayers $6 million a year and, at this committee's
direction, converted that building to a property that is
generating about $250,000 a month for taxpayers. So I--and
where we ended up having a substantial amount of historic
preservation take place to make sure that building remains in
good condition into the future.
So I think that that has, overall, been a very good--and it
was actually a bipartisan directive from Congress for GSA to do
this, long before I was there.
Ms. Davids. OK.
Ms. Murphy. So I don't take any credit for it. I think----
Ms. Davids. So----
Ms. Murphy [continuing]. It was a wonderful idea. I believe
that your colleague was actually the one who----
Ms. Davids. Thank you. So, as you engage in outleasing,
again, of--100 percent outleasing of a historic building, are
you going to--do you think that the lease will look the same?
One of the things that I am wondering about--I haven't seen
all of the provisions of the lease, but it seems to me that
there might be room for provisions that maybe address a
significant change in circumstance. It is not unusual to have
assignment provisions. It is not unusual to have change in
ownership provisions.
And in the case of a building that is owned by the Federal
Government, do you foresee having any new provisions that might
address the potential for having someone who was not an elected
official becoming an elected official, and making sure that we
are not having to take up all of this time doing all of this
oversight?
Ms. Murphy. I think that is something I would love to work
with this committee on trying to craft the appropriate language
in looking at those.
I would point out we only have, I believe, five or six
outleases where more than 20 percent of the building is
outleased. So this is a very rare circumstance for GSA.
Ms. Davids. OK. It is a rare circumstance, but you also
indicated that this was absolutely critical to maintaining and
addressing the historical buildings and that sort of--you said
there were 400 to 500 historic buildings. I just want to make
sure it is critical or it is not critical.
Ms. Murphy. So it is--the--there are two questions. Is the
funding we receive from outleasing great for our historic
preservation? Yes. As a portion of GSA's entire portfolio,
though, these 600 outleases, as I said, only 5 or 6 of them are
more than 20 percent. The entire portfolio of outleases are
only about $28 million a year.
Ms. Davids. OK.
Ms. Murphy. So----
Ms. Davids. So I just want to make sure that, as we move
forward, that you all are really forward-thinking about the way
that you do this leasing process when you are talking about
outleasing to private entities, and that you are making sure
that, one, there is auditing that is happening. Because when I
spoke--when the person was here before that I spoke to from
GSA, he was supposed to be running the program, and was
completely unaware of whether or not they were doing auditing.
And then, two, making sure that this is actually--if it is
critical, that is great, but making sure that we are forward-
thinking about what potential might come up. I think there are
a lot of professionals who have seen a lot of circumstances in
the GSA, and that we probably could have avoided this, had the
lease been drafted better.
And then this--the last thing, I guess I just want to know,
like, do you think that this is so critical that it needs to
continue, or do you think that we should look at selling these
buildings outright, and not doing this?
Ms. Murphy. I think that selling some of these historic
buildings outright would mean that they would not remain--that
that would be a loss to the Government.
We are looking and working--we have worked with the FASTA
board and with others on trying to sell properties that are
not--that are underutilized or unused, so that we can start
expediting the sale of those, and get those off the books----
Ms. Davids. But that are not historic buildings.
Ms. Murphy. But they are not historic buildings, yes.
Ms. Davids. OK. So we should definitely make sure that we
are holding onto our historic buildings, and maintaining them.
Ms. Murphy. I think it is a cost-benefit analysis of the
historic building, the expected return on investment from
keeping that building, the amount of repairs that are needed,
whether we can find a suitable tenant for that building. So I
think that it is--there are multiple factors that go into that.
But generally, I just--some of these buildings are beautiful,
and----
Ms. Davids. Yes.
Ms. Murphy [continuing]. The thought of losing them is sort
of heartbreaking.
Ms. Davids. Yes, I agree. I agree. OK, thank you very much.
I yield back.
Ms. Titus. I now recognize Mr. Palmer for 5 minutes.
Mr. Palmer. Thank you, Madam Chairman. I want to go back to
the question my colleague just raised about being good stewards
of the taxpayers' money.
Again, for the record, you assert that, prior to the Trump
Organization taking possession of this property and converting
it to a hotel, we were losing over $6 million a year in
taxpayer money. Is that correct?
Ms. Murphy. That is what I understand, sir, yes.
Mr. Palmer. OK. And you also asserted that the Trump Hotel
now generates $250,000 per month in revenue. That is $3 million
a year.
Ms. Murphy. Yes, sir.
Mr. Palmer. And for those who are math challenged, that
would indicate that the taxpayer benefit would be somewhere
between $9 and $10 million a year, given the losses that were
being incurred.
Ms. Murphy. Yes, sir.
Mr. Palmer. Would you agree that that is a positive for the
taxpayers?
Ms. Murphy. I believe so, sir.
Mr. Palmer. Even for those who are math challenged?
Ms. Murphy. Yes, sir.
Mr. Palmer. You would agree? I think so, too.
The GSA gets--is audited. Is that an independent audit or a
self-audit?
Ms. Murphy. Yes, we have an independent auditor who comes
and reviews our----
Mr. Palmer. For those who dispute this benefit to the
taxpayers, would you provide to this committee a letter from
your auditor that--without violating any of the privacy
requirements--that simply shows that the GSA is getting a
return of $3 million a year?
Ms. Murphy. I am happy to ask the auditors for that and
provide it to the committee.
Mr. Palmer. I think if--particularly if it is an
independent audit, a reputable auditor, that should be
sufficient to show that this is a substantial benefit to the
taxpayers.
Ms. Murphy. Yes, sir.
Mr. Palmer. If you could do that, I would appreciate it.
Ms. Murphy. Yes, sir.
Mr. Palmer. The GSA has also offered to provide Congress--
this committee, specifically--access to the documents that will
answer many of the questions that are being raised. And the
only qualification that you assert is that the documents can't
be made public. Is that an accurate assessment?
Ms. Murphy. That they not be made public without our prior
permission. Yes, sir.
Mr. Palmer. Without your prior permission. And you have
made that offer several times?
Ms. Murphy. Yes, sir.
Mr. Palmer. Yet this committee has declined that offer?
Ms. Murphy. They have not accepted it yet. I am hoping that
they are going to accept it at some point.
Mr. Palmer. I think, frankly, we should accept it. And if
there are people who have trouble reading financial reports,
could the GSA provide some people who could walk members of the
committee through that, and explain it to them in simple
language?
Ms. Murphy. I would be happy to make that--those experts
available, sir.
Mr. Palmer. That would be greatly appreciated. And
hopefully there will not be any leaks that would violate any of
the privacy agreements. And then we could reach an agreement
with GSA on what could be released.
With that, Madam Chairman, I will yield back. I will yield
to Mr. Pence.
Ms. Titus. Mr. Pence?
Mr. Pence. Thank you, Madam Chair. I just want to kind of
make some points, and then you say that is correct or that is
incorrect.
So in 2008 the OPO lease was directed by Democratic
legislation. Is that correct?
Ms. Murphy. Yes, sir.
Mr. Pence. OK. And the law required this committee to
receive a report before the lease was signed. Is that correct?
Ms. Murphy. I believe so, sir. Yes.
Mr. Pence. And that report was received in 2013. Is that
correct?
Ms. Murphy. That sounds correct. Again, that was before I
came to GSA.
Mr. Pence. OK.
Ms. Murphy. So yes----
Mr. Pence. And there were no objections to the provisions
that were presented----
Ms. Murphy. None that I am aware of.
Mr. Pence [continuing]. To the committee.
Ms. Murphy. No.
Mr. Pence. OK. Thank you. I yield back. I yield back to Mr.
Palmer.
Mr. Palmer. Yes. There is one other thing that I wanted to
raise. In the last hearing, Madam Chairman, it was the chairman
of the full committee, Mr. DeFazio, indicated that there was a
meeting with a GSA official, and that he was informed of--that,
via a phone call and by email. I asked that the information
from that meeting be provided to the committee. That has not
been provided as of this date. I would like to get that
information, if possible. I think you agreed to do that.
Ms. Titus. I will look into it.
This is for the witness?
Mr. Palmer. Well, the question for the witness is are you
aware of a meeting between members of this committee and GSA?
Ms. Murphy. So I believe the meeting that is being
referenced is a meeting that took place in December of 2016
between the Deputy PBS Commissioner and some members of the
Democratic staff here. I have asked about that meeting. It,
obviously, took place before I was at GSA, and was actually
still working on the House side at that point in time. And I
have got--received contemporaneous email accounts of what took
place in those meetings. I would be happy to share that with
the committee. But it----
Mr. Palmer. Would you provide----
Ms. Murphy. Yes.
Mr. Palmer [continuing]. Those contemporaneous notes to me?
I don't know if any other members of the committee would be
interested, but I would definitely be interested.
I yield back.
Ms. Titus. Thank you.
Mr. DeFazio. Madam Chair, may I just clarify? I have no
objection. That was a House staffer on this committee, Elliot.
And also a Republican staffer was present at the meeting. And
so this was no secretive meeting. There were no Members of
Congress there.
We were raising questions about emoluments, which GSA
initially said was a big problem. And then, oh, later, they
changed their mind. So we will, you know--whatever she can
provide, we would love to have.
Ms. Titus. OK, thank you.
According to Mr. Palmer's math challenge, we--the taxpayer
would have gotten $27 million from the hotel. If Mr. Trump
sells it for $500 million, how much of that will go to the
taxpayers?
Ms. Murphy. So, again, that--the lease itself governs how
the proceeds of the sale are--
Ms. Titus. What would that be? What would that come to?
Ms. Murphy. I don't know the specific----
Ms. Titus. I think it is zero.
Ms. Murphy. No, I don't believe that that is correct,
ma'am. I believe that there is--the lease does provide for the
taxpayer to receive some portion of that.
Ms. Titus. Maybe you could find the answer out----
Ms. Murphy. I would be happy to get back----
Ms. Titus. OK, we will recognize Ms. Holmes Norton.
Ms. Norton. Thank you, Madam Chair. This hearing on the
Trump Hotel is of special interest to me, since it was my bill
that finally got this hulk of a building from which the Federal
Government was earning nothing--in fact, losing money--finally
got this bill through. I was in the minority. But the fact is
that we worked together with the Republican majority.
Before I get to that, could I ask you something, another
question about GSA's present posture of moving the--of the
status of these Federal agencies, though serving the District
of Columbia: Court Services and Offender Supervision Agency,
Pretrial Services Agency, and Public Defender Service? All of
these agencies have been kept within a synergy with the other
side, the Metropolitan Police Department. The various actors on
both sides have been kept within a certain short distance from
the courthouse because they can be called, and the courts do
not want delay.
But GSA is insisting upon moving the public defender more
than a mile away, the U.S. Attorney is four blocks away. That
breaks with long history. So what was the rationale for moving
the public defender further from the courthouse than the U.S.
Attorney?
Ms. Murphy. Congresswoman, I am not certain. I would like
to--I am not familiar with the situation. I would like to have
the opportunity to look into it and come back and brief you on
it. That would be----
Ms. Norton. I would ask you to get back within 30 days, so
we can understand your rationale.
Ms. Murphy. I am sorry, I missed the----
Ms. Norton. Get back within 30 days so we can understand
your rationale.
Ms. Murphy. Of course, yes.
Ms. Norton. Now, as I indicated, the Old Post Office was my
bill. My friends on the other side talk about benefit to the
taxpayer. Of course there is a benefit to the taxpayer. But the
question is how much benefit to the taxpayer. There is no
benefit to the taxpayer if the hotel doesn't--it doesn't also
benefit the--at this point, the Trump Hotel.
So the Trump Hotel--the Trump Organization wants to sell
the lease. That suggests that it is not as profitable for them
as they desire and expect. What does that tell you about how
the lease should be handled when it goes to a new party?
Ms. Murphy. So GSA's----
Ms. Norton. Do you know why they want to sell the lease?
Ms. Murphy. I don't know why they--and I have not had any
conversations with them about that. The----
Ms. Norton. They won the lease in a very competitive
process. They paid millions of dollars to upgrade it, because
it was a historic property and, presumably, made it profitable.
But GSA should be concerned that, so soon after, in fact, in a
competitive process getting the hotel, they want to outlease
the hotel.
Have you--in deciding how to handle this matter going
forward, or similar matters, have you studied this matter
enough to know whether or not this was worth it, and what to do
as they outlease to another party who may have the same
problems?
Or is there--did these problems develop after he became
President? Did that have anything to do with whether or not the
property was, in fact, being leased?
Of course, he wasn't President when he won it. But if --is
that perhaps the reason that the hotel is not making enough
money for him to want to keep it?
Ms. Murphy. So I wouldn't want to speculate as to why the
tenant is making any business decisions. What I am concerned
with is that GSA is receiving its rent each month, that the
property is being properly maintained, and that GSA is listed
appropriately on the insurance certificate.
If and when we are presented with a proposed qualified
transferee, those will be among the questions that--the lease
requires that we ask also, does the--would the proposed
qualified transferee have the necessary assets----
Ms. Norton. The other side----
Ms. Murphy [continuing]. To pay us.
Ms. Norton [continuing]. Talked about the benefit to the
taxpayer. I am trying to decide whether there could have been
more benefit to the taxpayer--suggests that we are not getting
the benefit we expected, because the Trump Organization wants
to get rid of it. Surely they made some profit. But they would
not want to be getting rid of a very profitable property,
unless it fell below their expectations. If it falls below
their expectations, then the Government is not getting what it
expected from the property, either.
And that is the question I have for you: Are we getting
what we expected in dollars and cents from the outlease of this
property to the Trump Organization?
And how will you make sure that the Government gets the
profit it desired when it outleased it to the Trump
Organization?
Ms. Murphy. So the Government is currently being paid. We
are being paid every month on--I believe it is the 5th of the
month we receive our rent payment. Our rent payment is due,
regardless of profit or loss. We get paid. And that is what
GSA's concern has been, because that is how we protect the
taxpayer.
If we are asked to look at a qualified transferee, we would
look at whether or not that transferee has the necessary assets
to make sure that the taxpayers will continue to receive that
payment.
Ms. Norton. Thank you, Madam Chair.
Ms. Titus. Miss Gonzalez-Colon?
Miss Gonzalez-Colon. Thank you, Madam Chair. And good
morning to Administrator Murphy.
I want to begin by saying thank you for your involvement in
the rebuilding process in Puerto Rico as we continue to phase
the recovery process from the hurricanes. I know, as per our
conversation, that you are going to be visiting the island
during the next weeks regarding many of those buildings that
were not prepared for hurricanes. So there were either
earthquakes--and GSA is doing the investment to put them to
withstand that situation. So thank you for that and for the
visit to the island.
I have been reading about this. This is not the first
hearing we've got about this hotel. And actually, you have been
saying time and again that this was approved prior to your
being the GSA Administrator. This bid process commenced--began
in 2012, correct?
Ms. Murphy. So the process began in 2008, when the
legislation was passed, and the contract--the competition took
place in 2012. That is when, I believe, the lease was drafted.
And it was signed, and it moved forward from there.
Miss Gonzalez-Colon. And at that time, President Trump was
not even President or even running for President.
Ms. Murphy. No, ma'am.
Miss Gonzalez-Colon. And that contract award of using the
lease was awarded prior to that. And he was--I recall that,
even during the 2016 campaign, nobody brought that issue about
this building.
Ms. Murphy. I wasn't party to any conversations about it
then. I was working for the Armed Services Committee at that
point, so----
Miss Gonzalez-Colon. So the employees that usually work
with the awarding of these outleases are career employees,
correct?
Ms. Murphy. Yes, ma'am.
Miss Gonzalez-Colon. So this is a regular process that goes
on in GSA, where regular career employees revise and recommend
an award, whoever is going to be the tenant for these
outleases, correct?
Ms. Murphy. All contracting decisions, whether they be
leases, outleases, or other contracts, are made by career
employees, yes.
Miss Gonzalez-Colon. So we can't say that any Trump
administration official or political employee influenced, at
that time, any of the career employees in GSA.
Ms. Murphy. That is correct. And I think, if you look at
the inspector general's report, she looked at 16 months and
found--there was no finding of any political influence being
brought to bear.
Miss Gonzalez-Colon. And just to state a fact, it was
approved during the Obama administration.
Ms. Murphy. Yes, ma'am.
Miss Gonzalez-Colon. So not under the current
administration.
Ms. Murphy. Correct.
Miss Gonzalez-Colon. And, as Mr. Palmer and Mr. Pence
stated in their opening statements, this committee received
information regarding these during that time. Nothing--there
was no opposition to the lease at that time, correct?
Ms. Murphy. There was--I am sorry, I am not sure I am
understanding the question. I want to make sure I am precise--
--
Miss Gonzalez-Colon. Well, I mean, we received notification
about the lease, but there was no opposition in the committee
at that time.
Ms. Murphy. I wasn't with GSA at that time, but I was
unaware--I have never been made aware of any opposition being
raised.
Miss Gonzalez-Colon. So the opposition begins after the
President was inaugurated.
Ms. Murphy. Yes, I believe that is when the----
Miss Gonzalez-Colon. So it is clear that this is just
because it is the Trump Hotel. Are we doing this kind of
investigation with any other outleases that GSA has?
Ms. Murphy. Not that I am aware of.
Miss Gonzalez-Colon. Thanks. With that I yield the rest of
the time to Mr. Pence, if he wants to use it.
No? With that I yield back.
Ms. Titus. Thank you. Let's just be clear that the reason
this is an issue is because Mr. Trump is President. If he were
still a private businessman, we wouldn't be concerned about
emoluments. So all this discussion of Obama entering into an
agreement when Trump was a private citizen is fairly
irrelevant.
We will go now to Mr. Garamendi.
Mr. Garamendi. Well, thank you, Madam Chair. That is
precisely where I was going to start. This issue is not one of
where the lease began. This issue is one of the President--of
the lessee, Mr. Trump, becoming President, and now in direct
violation of the Emoluments Clause.
So my question to you really deals--Administrator Murphy,
could you please confirm for the record that the GSA has no
idea whatsoever as to how much spending by foreign governments
accounts for the income and profits at the Trump Hotel?
Ms. Murphy. That is correct, sir.
Mr. Garamendi. So you have no idea about foreign
expenditures at the hotel. Correct?
Ms. Murphy. I--the only thing I know is what I have read in
the paper.
Mr. Garamendi. I am sorry, the only thing you know is----
Ms. Murphy. The only thing I know is what has been reported
in the papers.
Mr. Garamendi. I see. Have you ever made an attempt to
request information from the Trump Hotel organization regarding
foreign spending at the hotel?
Ms. Murphy. No, sir.
Mr. Garamendi. Why not?
Ms. Murphy. That is--again, that would be the lease
contracting officer's determination, and----
Mr. Garamendi. I see.
Ms. Murphy [continuing]. It is not within the scope of the
contract----
Mr. Garamendi. So it is the contracting officer.
You were sworn in as an official of the U.S. Government?
Ms. Murphy. Yes.
Mr. Garamendi. And you took an oath of office?
Ms. Murphy. Yes, sir.
Mr. Garamendi. Did that oath include upholding the
Constitution?
Ms. Murphy. Yes, sir.
Mr. Garamendi. Including Article I?
Ms. Murphy. Yes, sir.
Mr. Garamendi. Section 9, Clause 8? Specifically, the
Emoluments Clause?
Ms. Murphy. Yes, sir.
Mr. Garamendi. So that is included, but yet you have not
asked any questions whatsoever from the Trump Hotel
organization about foreign spending?
Ms. Murphy. So----
Mr. Garamendi. Which is an emolument.
Ms. Murphy. The Emoluments Clause has been--issue is being
currently litigated in three lawsuits I am aware of. Those were
filed before I became the Administrator.
I believe when there is a----
Mr. Garamendi. And, therefore, it is not your
responsibility. Is that what you are saying?
Ms. Murphy. The Department of Justice has publicly argued
that there is not an Emoluments Clause violation.
Mr. Garamendi. I see.
Ms. Murphy. They speak for the executive branch on issues
of constitutionality. When there is a conflict, it is resolved
in the courts. And when there is a final determination in the
courts----
Mr. Garamendi. Thank you.
Ms. Murphy [continuing]. GSA will act accordingly.
Mr. Garamendi. We understand stonewalling very well around
here.
Let's see. It says, ``Without the consent of the
Congress.'' It was earlier suggested that this committee has no
interest--I would suggest that all of us read the Emoluments
Clause. And it says, ``Without the consent of the Congress.''
Has Congress consented to foreign expenditures at the Trump
Hotel?
Ms. Murphy. Again, sir, it would be inappropriate for me
to----
Mr. Garamendi. The answer is no, we have not. You are aware
of that, I suppose.
So you are basically saying that, in direct contradiction
to the inspector general, you have no interest in determining
whether there is foreign expenditure at the hotel?
Ms. Murphy. The inspector general has not recommended that
we undertake any such action. The inspector general gave us one
recommendation, and that was that we prospectively alter the
clause in the contract. And we have done----
Mr. Garamendi. Have you attempted to do that?
Ms. Murphy. Yes, we have agreed to alter the clause, and we
now actually use a reference to the underlying statutes,
instead, sir.
Mr. Garamendi. Have you--so you have no idea about foreign
expenditures. You offered to the committee to show the records.
Is that correct?
Ms. Murphy. Yes----
Mr. Garamendi. So long as we keep it secret.
Ms. Murphy. Yes, sir.
Mr. Garamendi. And you now tell us that those records have
no--there is nothing in that record about foreign expenditures.
That is who the guests are at the hotel?
Ms. Murphy. No, those records, it is my understanding,
would not include that information. Those records are--
financial records we receive from the tenant are those that are
required by the lease. They include the audited financial
statements. We received that information. It does not give the
level of specificity, though, that I believe you are asking
about.
Mr. Garamendi. I would suggest that we need to get those
records in order to determine if there are, indeed, foreign
expenditures at the hotel, which, of course, we know there have
been.
With regard to the lease sale, very--I want a very specific
answer. Are you going to investigate any potential sale of the
lease as to whether it is from a foreign entity or a foreign
government?
Ms. Murphy. I am not going to speculate on hypotheticals. I
am going to assess----
Mr. Garamendi. That is not a hypothetical. That is a
specific question. Are you going to investigate whether the
sale of the lease involves a foreign government or a foreign
entity?
Ms. Murphy. When we receive--if we receive an offer from
the tenant to substitute a qualified transferee, we will do the
assessment that is required.
Mr. Garamendi. So the answer to my question is no, you will
not?
Ms. Murphy. If that is required, that is what we will do. I
don't know what the offer is going to be at this time. I don't
know if we will receive an offer----
Mr. Garamendi. May I suggest that you carefully read the
Constitution of the United States and your oath of office, in
which you said you would uphold the Constitution, including the
Emoluments Clause?
I yield back.
Ms. Titus. Let's clear up something else. You said that,
prospectively, you have changed this in compliance with the
IG's recommendation about emoluments. But let's be clear.
Didn't you only change it to apply to Members of Congress, not
to the President, or potentially other people----
Ms. Murphy. So----
Ms. Titus [continuing]. Who are in Government?
Ms. Murphy. So the change that we made was--so the
recommendation from the IG was that we--before continuing to
use the language, we determine the purpose of the ``interested
parties'' provision, and then--and act in accordance with that.
So the IG, in conducting her own review of the ``interested
parties'' provision, was also unable to determine exactly why
we had that provision. And the best that we had was it was
based on the statutory predecessor to title 18 and some other
statutes.
So what GSA did was say that, prospectively, we will refer
to the statutes that are governing. And if and when there is an
additional statute that governs how we deal with these leases,
we will amend the lease, accordingly.
Ms. Titus. So you just relied on one statute that mentioned
Members of Congress, as opposed to expanding it to say other
members of Government.
Ms. Murphy. Correct, ma'am.
Ms. Titus. Well, that is--I think that is something this
committee better clear up so that you won't have any doubt
about that, going forward.
All right, who is next?
Mr. Perry?
Mr. Perry. I thank my friend from the great State of
Nevada.
Administrator, just out of curiosity--I am offended. I
don't know that you are, but I am offended for you at the
implication, the inference that you are not upholding the oath
of office that you have taken. In that regard, do you consider,
if the courts don't find in favor of the opinions of some of my
colleagues on the other side of the aisle, would you consider
that to be stonewalling?
Ms. Murphy. No, sir.
Mr. Perry. That would be the process. And sometimes we
agree with the court's findings and sometimes we don't, as
Americans. Right?
Ms. Murphy. Yes, sir.
Mr. Perry. Just--I know you were cut off on numerous
occasions when the chairman was asking you questions, and
unable to fully complete your answer. I just wanted to give you
the opportunity to do that now, and I--with the specific
interest in your--if you can remember--the IG recommendations
regarding these issues.
Ms. Murphy. So again, the IG gave us one very specific
recommendation, and GSA agreed to that recommendation. We have
taken the actions in accordance with that recommendation. We
read the recommendation as being prospective, and so we have
applied it prospectively.
The--and we continue to, you know, have a working
relationship with--a good working relationship with the IG. I
meet with her monthly to see how we can better manage GSA.
Mr. Perry. Administrator, do you think that all Americans,
regardless of their stature, financial position, connection to
politically powerful people, organizations, institutions,
deserve the same standard of treatment under your
organization's rules and procedures?
Ms. Murphy. Yes, sir.
Mr. Perry. So do you believe, then, that because the Old
Post Office is owned by--or leased, correction, leased--by the
Trump Organization, that they should withstand a different set
of circumstances than every other American or every other
country--company operating such leases in America?
Ms. Murphy. So, sir, I want to be really careful in
answering your question, because I think we are starting to
conflate two issues, one of the Emoluments Clause and one of
the lease.
And the--as I mentioned earlier, the first lawsuit on the
Emoluments Clause was filed before I ever started at GSA. And
then, on the lease, the contracting--our contracting officer
determined the tenant was in full compliance with that lease in
March of 2017. I didn't become Administrator until December of
2017. And when he made that determination he issued a
certificate of estoppel.
So my opinion is absolutely irrelevant. I am estopped from
taking any action. There is a final decision that has been
made. The only time I am going to have an opportunity to make a
decision is if--and again, I say if--we receive this qualified
transferee. And at that point in time I am going to do the
right thing.
Mr. Perry. So, just to go back on your own statement there,
you said that the organization was in full compliance. Is that
correct?
Ms. Murphy. Yes.
Mr. Perry. In full compliance. So, based on that, having no
reason to change things, I am not sure why we are here.
I come from south central Pennsylvania, where the roads are
clogged up at 7 o'clock and 5 o'clock in the evening with
traffic. We are not in this committee, Transportation and
Infrastructure--people are looking for improvements in their
lives, whether it is the road network, water, gas, sewer,
broadband, cable. Yet here I sit in another hearing about the
Old Post Office in Washington, DC.
Let me just ask you this: Boeing was brought up in the
context of this conversation, where Boeing is the subject of
scrutiny and investigation regarding the untimely and
unfortunate deaths of hundreds of people. Whether they have
anything, you know, directly to do with that is yet to be
determined, is being determined at this time. Does that have
any relevance whatsoever to the issue at hand regarding the Old
Post Office in Washington, DC?
Ms. Murphy. Not that I am aware of.
Mr. Perry. Not that I am aware of, either, ma'am.
You said that we are allowed to peruse financial
information and records, but not legal records in this
instance. Is that different than any other instance in the
entire portfolio that you manage?
Ms. Murphy. No, sir, and it is not different than the--I
can't think of any administration that has provided--any GSA
Administrator who has ever provided those legal memoranda.
Mr. Perry. So why should we--what is the reason we would
single out this one? What is the reason?
Ms. Murphy. I would defer to the committee for--to answer
that question, sir.
Mr. Perry. Madam Chair, I yield back the balance.
Ms. Titus. Thank you. Can you think of any other
circumstance where the President has a lease, outlease, or any
kind of lease that would make this like any other lease because
the President is not involved?
Ms. Murphy. No, ma'am.
Ms. Titus. No? OK, thank you. All right.
Mr. Johnson?
Mr. Johnson of Georgia. Thank you, Madam Chair. You know,
it amazes me how it seems that my friends on the other side of
the aisle are willing to compromise their values and their
prerogatives as Members of the Congress to oversee operations
of the executive branch, particularly when it would come to a
money-making venture that the President of the United States
benefits from. It just--I don't understand why they can't
understand the significance of overseeing these types of
situations.
Maybe it is because everybody likes to go to the Trump
Hotel, to the watering hole, then hang out in the Trump lobby
with Lev Parnas and everybody else over there. I think he
called it a cesspool over there, where you got a bunch of folks
trying to get ahead. And it seems like everybody--all of my
friends on the other side of this dais want to try to get into
the favor of the President. So I probably wouldn't doubt that
many of them frequent the Trump bar over there at the hotel.
But at any rate, as the Administrator of the General
Services Administration, Ms. Murphy, you do understand the
Emoluments Clause, the Foreign Emoluments Clause, do you not?
Ms. Murphy. I do, sir. I won't claim to be an expert on it.
Mr. Johnson of Georgia. You are aware of the fact that the
Trump Organization has made plans to sell the Trump
International Hotel, and in marketing materials provided by
Jones Lang LaSalle, which is their sales agent, the Trump Hotel
has admitted that it has experienced only a 57-percent
occupancy this year, which, compared to a 75-percent occupancy
rate for competing high-end hotels, indicates that the Trump
Hotel is not living up to expectations with respect to the
leasing of hotel rooms.
But do you have that--any of that information having to do
with its banquet facilities, its bars, or other operations?
Ms. Murphy. Sir, I have never looked at the financial
records. It is my understanding that they look at whether--how
rent is calculated, what the gross receipts are, I don't
believe that it goes into the detail. But again, as I----
Mr. Johnson of Georgia. You don't think that is important,
from an emoluments standpoint?
Ms. Murphy. From the emoluments standpoint, or from a
perspective of----
Mr. Johnson of Georgia. From an emoluments standpoint. You
are aware of the Emoluments Clause, you are the Administrator
of the GSA. You don't take the Emoluments Clause seriously?
Ms. Murphy. I take the Constitution very seriously, sir,
but----
Mr. Johnson of Georgia. Well, let me ask you this.
Ms. Murphy [continuing]. Tthe Department of Justice----
Mr. Johnson of Georgia. Let me ask you this. Marketing
materials from JLL assert that the hotel is ``organically
positioned to market and solicit foreign government business''
because of its close proximity to the White House.
Would you agree with me that a President of the United
States of America being positioned to market and solicit
foreign government business is precisely what the Emoluments
Clause seeks to avoid?
Ms. Murphy. Sir, given that there is ongoing litigation,
which I believe----
Mr. Johnson of Georgia. Well, I am----
Ms. Murphy [continuing]. Members of this subcommittee----
Mr. Johnson of Georgia [continuing]. Asking you for your
opinion, since you are aware of the Emoluments Clause, and----
Ms. Murphy. But----
Mr. Johnson of Georgia. And you understand it.
Ms. Murphy. Given that there is ongoing litigation----
Mr. Johnson of Georgia. Isn't that the----
Ms. Murphy. It would be----
Mr. Johnson of Georgia. Isn't that----
Ms. Murphy [continuing]. Inappropriate for me to comment--
--
Mr. Johnson of Georgia. Hold on one second, ma'am. Isn't
that the exact scenario that the Emoluments Clause seeks to
avoid? Yes or no?
Ms. Murphy. The Department of Justice has stated that
there----
Mr. Johnson of Georgia. OK, so you are not going to answer
that question.
Ms. Murphy [continuing]. Is not an emolument----
Mr. Johnson of Georgia. OK. All right. So let me ask you
this. When the inspector general, Carol Ochoa, appeared before
this committee in September of last year she testified that GSA
inappropriately failed to consider the Emoluments Clause before
declaring the Trump International Hotel lease valid in March of
2017.
Ms. Ochoa recommended that GSA update their outlease
language to avoid concerns of compliance in the future. And GSA
has yet to make those amendments. Can you explain to the
committee why GSA has resisted implementing the inspector
general's recommendations?
Ms. Murphy. So I would like to first say that the GSA IG
found the decision to not evaluate the Emoluments Clause was
made by the prior administration. No one in this administration
was involved in that decision. The----
Mr. Johnson of Georgia. Well, now, you are not answering
the question I just asked.
Ms. Murphy. The IG made a recommendation, and it was
specifically that the continuing--before continuing to use the
language, GSA determined the purpose of the ``interested
parties'' provision, conduct a formal legal review by the
Office of General Counsel that includes consideration of the
Foreign and Presidential Emoluments Clauses, and revise the
language to avoid ambiguity.
GSA agreed that the--with the single recommendation, and
said that we will take action consistent with that
recommendation prior----
Mr. Johnson of Georgia. But you have not done so yet.
Ms. Murphy [continuing]. To continuing to use that
language. And we have. We have modified the language that we
will use in future outleases.
Mr. Johnson of Georgia. You have?
Ms. Murphy. We have.
Mr. Johnson of Georgia. OK. All right, thank you. I yield
back.
Ms. Titus. Just to be clear, in September 2019 the IG said
that the agency's proposed corrective action is not responsive
to the recommendation, and therefore considers it an
outstanding recommendation. So has this changed since
September?
Ms. Murphy. GSA considers that we have taken final
corrective action. The----
Ms. Titus. They just don't accept it as valid.
Ms. Murphy. The----
Ms. Titus. Apparently.
Ms. Murphy. I----
Ms. Titus. OK.
Ms. Murphy [continuing]. Not agree with it.
Ms. Titus. Mr. Massie?
Mr. Massie. Thank you, Madam Chairwoman.
Ms. Murphy, you said in your opening statement that Dan
Mathews, the Commissioner of GSA's Public Buildings Service--
you reminded us that he testified last September and gave us a
timeline of the lease of the Old Post Office. And I would like
to go through some of that timeline. Even though you didn't
dedicate too much of your opening statement to that, I would
like to go through some of that right now.
Prior to 2008, the Old Post Office operated at a loss of
$6.5 million a year. Is that correct?
Ms. Murphy. Yes, sir.
Mr. Massie. And in 2008, Washington, DC, Delegate Norton
introduced the Old Post Office Building Redevelopment Act of
2008, directing the GSA to relocate Federal tenants there and
redevelop the Old Post Office. Is that correct?
Ms. Murphy. Yes, to find a higher and better purpose for
the building, I believe, was the----
Mr. Massie. Higher and better purpose. And then, there was
a competition in 2011. I believe the President at the time was
President Obama. And in 2012 the Trump Old Post Office LLC was
selected as the winner.
In other words, under the prior administration, under
President Obama, it was determined by the GSA that the highest
and best purpose for that building was to lease it to the Trump
Organization because they were going to invest millions of
dollars into the redevelopment of it. Is that correct?
Ms. Murphy. That is my understanding. I was, again, not a
GSA official at the time, so----
Mr. Massie. So in 2013 who was the President?
Ms. Murphy. President Obama.
Mr. Massie. President Obama. And the lease agreement was
executed under President Obama. In 2014, under President Obama
and his administration, the GSA delivered exclusive possession
of the premises to Trump Old Post Office LLC. In 2016,
construction completed, and a temporary certificate of
occupancy went to the Trump Organization. And in 2016, October
2016, the hotel officially opened.
During that entire time who was the President?
Ms. Murphy. Barack Obama was the President, sir.
Mr. Massie. President Barack Obama oversaw all of that, and
determined that it was the best purpose for that building.
I just want to remind folks that we are debating this
lease. Is there anything in that lease that was negotiated by
Obama that empowers the GSA to go into the finances of the
person who--or organization that leased the building, and
demand the things that are demanded today by the other side of
the aisle?
Ms. Murphy. GSA has the right to these--to audit the
statements that we are receiving right now. You know, we have--
if we are facing an issue where we are not being paid, or the
building is--if we feel that there is an issue with compliance,
we do have an ability at that point in time to exercise some
additional authorities. But we haven't had an issue where we
are not being paid our rent, or the building is not being
maintained, or that, you know, we have a concern about the
certificate of insurance, or any of those types of----
Mr. Massie. So they are in compliance. You----
Ms. Murphy. To the best of my knowledge, they are in
compliance.
Mr. Massie. OK.
Ms. Murphy. Yes.
Mr. Massie. So, just quickly, how does the lawsuit right
now that is underway constrain what you can do?
Ms. Murphy. So there are three lawsuits underway right now.
And because the Department of Justice speaks for executive
branch on legal matters, they have been publicly arguing that
there is no violation of the Emoluments Clause. It would be
inappropriate for me, as the GSA Administrator, to be opining
one way or the other. That is the Department of Justice's
decision to--making those.
Mr. Massie. And you mentioned there is an estoppel.
Ms. Murphy. So that is all--that is in regards to the lease
clause, and that estoppel certificate was issued--it was a--in
March of 2017, that found that the tenant was in compliance
with the lease.
And so, at that point in time, we were estopped from going
back and asserting that they were not in compliance with that
provision of the lease.
Mr. Massie. So you are basically doing your job right now,
as--under the constraints that are put on you.
Ms. Murphy. Yes, sir.
Mr. Massie. Thank you very much. I am going to yield the
remaining minute of my time to Mr. Palmer from Alabama.
Mr. Palmer. I thank the gentleman for yielding. I have a
question for Administrator Murphy.
If the President has turned over operational control of the
Trump Organization, then why would the Trump Hotel be required
to deny occupancy to a representative of a foreign government?
Should the hotel post signs at the doors that says that
individuals in service to a foreign government are not welcome
here?
Should we not allow anyone in service to, say, the
Government of Mexico or Canada to pay a market rate for a room
there, or should it only be U.S. citizens?
Ms. Murphy. And, sir, I apologize, I am going to have to
give you the same answer I am giving everyone else, which is
that it is inappropriate for me to comment on the application
of the Emoluments Clause, given the ongoing litigation.
Mr. Palmer. Well, the thing that is going on here that
concerns me is that, considering the constant badgering about
the hotel from my colleagues, the Democratic colleagues, I am
not surprised that the Trump Organization wants to get out of
the lease.
When the contract was negotiated, the lease was negotiated,
they did it as a business decision. It was not a political
decision. It has become a political football, another
opportunity to badger the President and, frankly--and I am
ashamed of some of the questions that have been directed to you
that insinuate a lack of character on your part, the badgering
of witnesses.
And I just finally want to point out that an individual
from a--representing a foreign government staying at the Trump
Hotel and paying the market rate is quite different than some
things that have happened in the history of this country
regarding U.S. officials, such as King Louis XVI giving a
portrait of himself that was surrounded by diamonds to Ben
Franklin, or the King of Spain giving a horse to John Jay. An
individual paying a market rate to stay at the hotel is quite
different.
And with that, Madam Chairman, I yield back.
Ms. Titus. Thank you. I don't recall John Jay or Benjamin
Franklin ever serving in the White House as President.
So let's--we will now move on to Mrs. Fletcher.
Mrs. Fletcher. Thank you, Chairwoman Titus. Thank you for
holding this hearing today.
And thank you, Ms. Murphy, for being here to testify. I do
want to follow up on this issue, because I do think it is
important. And my constituents at home expect our Government to
be efficient, effective, and ethical. And the questions that we
are asking in this committee go to all three of those things.
And I think that it is certainly the case, when we are talking
about using or leasing assets that belong to us, the people.
And so, it is with that in mind that I have some questions
for you about the process. And hopefully, it will be something
constructive, where we can talk about what we on this committee
can do to help address and alleviate the kinds of issues that
we are seeing, and the kinds of concerns that we have, going
forward. And I think that that is the purpose of this hearing.
It is very forward-looking.
So it is my understanding that you are an acquisitions
expert. And so I want to talk a little bit about that, because
it is my understanding there are multiple layers of rules and
regulations that direct GSA's acquisitions of goods, services,
and lease space.
The FAR is more than 1,000 pages long. It is 50-some-odd
volumes. The GSA acquisition manual, GSAR--I have the leasing
desk guide here--it is a big, big book. The--it is almost 900
pages long. There is a lot of guidance when it comes to a lot
of things except, it appears, for outleasing.
And I have a copy of the outlease program guide, which is
much smaller than most of the other regulations that you deal
with. And it is my understanding that that has created some of
the problems that we are experiencing now. And so I think it is
useful for us to talk about what it is we can do to be helpful.
I am correct, am I not, that the FAR, GSAR, and leasing
desk guide do not apply to outleases, correct?
Ms. Murphy. The FAR and the--the FAR does not apply to
outleases. It doesn't apply to leasing at all.
Mrs. Fletcher. Right.
Ms. Murphy. And the GSAR--there are provisions in it that I
believe we have written for leasing, because it is GSA's
manual. Each agency has its own supplement.
The leasing guide is for when we are buying--you know, we
are leasing space from others.
And then outleasing is when, obviously, we are taking
space--is Federal space and making it available to others.
So they are all, you know, very different sets of
circumstances.
Mrs. Fletcher. Sure. But there are extensive regulations in
these other contexts that don't apply when it comes to
outleasing.
Ms. Murphy. Correct.
Mrs. Fletcher. And, in fact, we have a 90-some-odd-page
outlease program guide as the guidance here.
And it is my understanding, too, when GSA wants to lease
something, it comes to us on this committee with a prospectus
to approve the lease.
Ms. Murphy. Yes, that is----
Mrs. Fletcher. Correct?
Ms. Murphy. That is our--yes.
Mrs. Fletcher. Right.
Ms. Murphy. That is what we do.
Mrs. Fletcher. And--but no outleasing comes before this
committee.
Ms. Murphy. No, because it is--we are not asking permission
to spend taxpayer dollars, authorization for that. We are
actually receiving funds in.
Mrs. Fletcher. But if some of those questions came to this
committee, there might be the opportunity to address some of
the things that have shown themselves to be challenges. Would
you agree with me on that?
Ms. Murphy. I would. I would want to highlight that the
average outlease that GSA does, over the course of the
outlease, is worth less than one-quarter of a million dollars.
So it is----
Mrs. Fletcher. Sure.
Ms. Murphy. Most of these are very small. So I would be
concerned with making it really hard to get, you know, that
lease on a roof.
Mrs. Fletcher. Well----
Ms. Murphy. An antenna on a roof, I was going to say.
Mrs. Fletcher. No, I appreciate that. And I think that you
would agree with me that outleasing an entire historic
building, such as the Old Post Office, should be handled
differently as outleasing space on a rooftop for an antenna, or
space in a lobby for a coffee shop, correct?
Ms. Murphy. Yes. And I believe that, at Chairman DeFazio's
request, GAO looked at our outleasing program about a year ago,
and came back with some recommendations, because there only are
about five or six of these large outleases.
And so I think it would--I would love to have the
opportunity to partner with this committee on figuring out how
we do a better job of managing those large outleases.
Mrs. Fletcher. And that anticipates my next question for
you, because, understanding that you have this background and
expertise, can you tell us a little bit of--in preparing for
this hearing on outleasing, which I know was not your expertise
coming into this, what has surprised you about the process
where you think we can make improvements?
And, kind of coupled with that, will you agree to work with
us to craft appropriate and meaningful regulations for
outleasing to avoid some of the kinds of issues that we have
been discussing, including transparency, reporting, procedures,
and forward-looking evaluations?
Because I would note--I made a lot of notes all over, and I
may have to do some questions for the record, but, you know,
one of the things that did concern me is that, as I read the
lease, once there is a proposal for a sale or a transfer, there
is 45 days to approve it, which, to me, means we need a plan in
place and the questions identified, such as is there going to
be an analysis of who the purchaser is, where are we in terms
of some of those--those essential questions. It seems like we
do need to do a plan, if there is a 45-day turnaround.
So will--tell us your thoughts on what surprised you, and
then what we can do to work together to craft regulations that
will be meaningful.
Ms. Murphy. The first thing that surprised me was, frankly,
how small most of these outleases are.
The second thing that surprised me is that we don't
distinguish between those where we are providing space to a
State or local government, or an educational institution. So,
for example, the University of Massachusetts, it has one of the
large outleases. And we don't distinguish between that and an
outlease for commercial purposes.
So it--I think there are lots of ways--I always would
welcome the opportunity to work together with this committee on
finding ways that we can be better stewards of taxpayer dollars
and of resources. So you have got my commitment that we are
happy to work with you on that.
Mrs. Fletcher. Thank you, and I see I have exceeded my
time. So thank you for that, and I yield back.
Ms. Titus. Mr. Cohen?
Mr. Cohen. Thank you.
You have got a tough job. You used to work for Mr. Graves,
now you work for Mr. Trump. One guy is the Show Me State, the
other guy is not going to show you nothing. So it is difficult.
Several of the people up here have said, well, Obama
approved this, or Obama's people approved that. You would agree
with me that doesn't necessarily make it the gold standard, or
right, does it?
Ms. Murphy. I think that they are simply reflecting what
happened, sir. So I don't know that there is a gold standard
for an outlease along these lines.
Mr. Cohen. Right. You look at what is right and what is the
best thing for the country, and not necessarily Obama did it,
or Calvin Coolidge did it, or whoever.
One of the questions that has come up has been the Monaco
Hotel. And as I understand it, and the response to the
questions we asked of your committee, there is confidential
information concerning the lease of the Monaco under the terms
and conditions of the lease. And GSA was contracting the
officer to get the--see if the tenant would consent to release
the information to the committee. These were in answers to our
questions subsequent to the hearing in September.
Do you know if the Monaco has responded to your--the
contracting officer who requested to release the information of
the committee?
Ms. Murphy. So I apologize, sir, I don't know. But I am
happy to look into that and get back to you very quickly.
Mr. Cohen. Sure. Well, that is question number 4 of my
questions with--on--for that date. It is toward the end of the
questions. And it said the GSA contracting officer has
requested the tenant's consent to release the information to
the committee. Subject to such consent, GSA will forward the
lease to the committee under separate cover.
So I appreciate your letting me know if they have
consented.
Ms. Murphy. OK.
Mr. Cohen. Secondly, why is the lease--does the lease have
that requirement? A lease is between you and the lessee. Why
would a Government agency, who is responsible to the public,
and responsible to Congress for oversight of what you are doing
in the public's good, why would you have a confidentiality
clause in a lease? Why would you agree to that?
Ms. Murphy. So I can't speak to why anything in 2012 was
negotiated the way it was, the terms of the lease. That is--I
wasn't party to that discussion, so----
Mr. Cohen. This is apparently not just this lease. This is,
apparently, all leases. This is referring to the Monaco, and it
said it is confidential information, or the terms and
conditions of the lease. Why would we have confidentiality on
any leases?
Ms. Murphy. Because I believe that most companies who are
doing business with us are very concerned that others are going
to be able to get a competitive advantage by seeing their
financial records. And so, in order to make sure that we have
companies willing to do business with us----
Mr. Cohen. Does the lease have anything about their
financial records? The lease, doesn't it just say what they are
obligated to pay in rent? And that is public information, is it
not?
Ms. Murphy. So the--and we have disclosed that we are--you
know, the amount that we are receiving under the OPO lease at
this point in time. I am not as familiar with the Hotel Monaco
lease, but the--my understanding is that most of our leases do
go--when they are for larger amounts of money, or if there is
any calculation that is based on gross, we are going to ask for
additional financial information.
Mr. Cohen. In the lease it asks for additional financial
information from the lessee?
Ms. Murphy. For--in an outlease, where the--there is a base
rent, or the rent could be based on a percentage of gross, yes,
we do ask for and we--I know, at least----
Mr. Cohen. That is not in the lease. The request for
information might be in the lease, or the requirement to
disclose, but the data concerning their financial situation is
not in the lease.
Ms. Murphy. I am sorry, the requirement to provide GSA with
that data is in the lease. Is that what you are----
Mr. Cohen. Right. This says that the----
Ms. Murphy. I apologize. I must have----
Mr. Cohen. The lease is confidential information, under the
terms and conditions of the lease, that--the lease itself is.
Please provide--the question was please provide the
committee with an unredacted copy of the Monaco lease, and all
accompanying amendments to the lease. And the response was that
is confidential under terms and conditions of the lease. Did--
that means that the lease cannot be revealed to the public.
That is ridiculous.
Ms. Murphy. And I apologize, sir. I am not familiar with
this lease, and I would be happy to get back to----
Mr. Cohen. If you would look into it, it is question number
4.
Ms. Murphy. OK.
Mr. Cohen. We want to see the lease, we want to see--and
see why you even make that confidential. You are putting--you
are agreeing to something to keep the public out of it. That is
not your job. You should not agree to that. And if a tenant
wants to not have the lease be public, there is something wrong
with the lease. That is number 1.
Number 2, have you looked at the Monaco--they pay more,
they pay above the base rent, so you have audited them, or they
have voluntarily done it. Why have you not audited the Trump
Hotel, post office, like the Monaco has done, to pay more than
the base lease?
Ms. Murphy. So the decision to conduct an audit would be
that of the lease contracting officer. That----
Mr. Cohen. Excuse me?
Ms. Murphy. That decision would not be a decision that I
make, sir. That is a decision the contracting officer makes.
And the--I think that the--if you all would be willing to come
in and take a look at those financial records, I think that a
lot of this information would--it would be a lot easier to
understand.
Mr. Cohen. In fact, I just have 1 last second, Madam
Chairman.
I would suggest--you said that you would--if it was
required, that you would look into the new owners of the hotel,
and were they a foreign influence. If it was required. If it is
not required, let me suggest you find a way to make it
required. You ought to do that if they lease this and sell
this.
And one other question. The Saudis apparently bought 500
rooms in the hotel. Do you have any basis to believe any of
those rooms were even occupied?
Ms. Murphy. I am not familiar with the day-to-day
operations of the hotel.
Mr. Cohen. Well, we ought to look into it, because 57
percent occupancy--I would like to know what percentage of the
rooms were sold. And you could sell rooms to a--anybody, a
foreign power, an American group, anybody. The rooms could be
sold and not used. And that is a way to provide graft, and that
is what the problem is here, in the--it is the Emoluments
Clause, but it is also to make sure they are not just cleaning
money or funneling money through room reservations, and not
using the rooms.
I yield back the balance of my time.
Ms. Titus. Mr. Palmer?
Mr. Palmer. In regard to some of the questions that have
been raised, I think there are potentially some constitutional
issues here in trying to direct the GSA. And I just want to
point out, again, as Mr. Massie pointed out, Mr. Perry pointed
out, and others, that the contract was negotiated and signed
during the Obama administration. And this committee was
briefed. There was a 30-day period. The committee was briefed
on it. All of the things that--the issues that have been
raised, the subletting, all of that is in the briefing
document. And there were no objections raised by any member of
this committee at that time.
And I will contend that the only reason objections are
raised now is it is purely political. It has nothing to do with
the execution of the contract, or the fact that you have gone
from losing over $6 million a year to making $3 million a year.
It is all political.
And I make this point, too. The Old Post Office lease was
submitted to this committee to review to--prior--pursuant to
the authority that the committee has, and there were no
objections.
With that I yield back.
Ms. Titus. Thank you. And I would point out that Donald
Trump was not President when he entered into that lease
agreement.
I have some questions, just to kind of sum up. I don't
think you are going to be able to answer them, because you
haven't so far. But would you find somebody in your office who
can explain the lease to us, and let us know how much money
taxpayers will get if Donald Trump sells the hotel for $500
million, as he is asking?
Second, we have determined there are very few guidelines
for outleasing of major buildings, yet there are a number of
guidelines for just the regular leasing process, including one
which you failed to acknowledge or pay any attention to when
you followed the IG, or allegedly followed the IG's
recommendation that you clean up the Emoluments Clause. And
this is one of your conditions of leasing that says no person
holding a federally elected office may directly or indirectly
participate or benefit from the lease. Why you can have this in
your leasing provision, but not in your outleasing provision,
is beyond me. So maybe you could explain that.
The third thing I am curious about--and this was mentioned
by Ms. Fletcher--is the 45 days. It took over a year,
originally, with the RFP, to come to this lease as it was first
written. But now only 45 days. You have got no rules, no
nothing to guide you. Maybe you will investigate, maybe you
will find out if they are a foreign power. Maybe you will just
depend on their self-disclosure. And you are going to have to
do it in just 45 days, which probably is not going to be
enough.
But the rest of that clause is what is so interesting. If
you don't get it done in 45 days, then the Trump Organization
will just issue a second notice that this is who we are going
to sell it to, and transfer of the lease will be deemed
approved without any kind of sign-off from the Federal
Government at all. So if you can't get it done in 45 days, they
will just do it automatically.
Now, do you want to address those three things? Do you have
any way to enlighten us further than what you have done so far?
Or do you want to take those for the record?
Ms. Murphy. I am--I had four down, so I also--maybe I want
to make sure that I have got all three of them correctly and
then get back to you on them, because I, for some reason, have
four items----
Ms. Titus. Well, if there are four, maybe that is four.
Maybe I miscounted. Maybe that was some of my creative math I
have been accused of earlier.
Ms. Murphy. So I think your first request is that we work
with having someone come in and walk through the terms of the
lease and how those provisions work. Of course, we will be
happy----
Ms. Titus. And how much money will the taxpayers receive if
it is sold for the $500 million.
Ms. Murphy. And then the second question you had was about
the outleasing versus leasing, and why there is a provision in
the leasing that isn't present in outleasing. Am I correct,
ma'am?
Ms. Titus. Yes, the provision about the federally elected
officials benefitting.
Ms. Murphy. And so I would be happy to get back to you on
it, but I believe the reason is that within the last few years
this committee has started including that language in its
prospectuses. And so we have been including that in our leases.
Ms. Titus. That doesn't answer my question of why you
wouldn't use this as the guideline for meeting the IG's
recommendation, as opposed to going back to some statute from
many years ago that was just referring to Congress, where we
were self-policing.
Ms. Murphy. Again, we are using that for all outleasing. So
the--in the current lease that we have, we don't have the
ability to go back and change that----
Ms. Titus. I got that. But you told me you had done this
prospectively, but you had relied on an old statute that had
only mentioned Congress. I am saying you got this in your
leasing provisions that refers to all Federal officials. Why
didn't you use that as the guideline, instead of some old
statute that you dug up?
Ms. Murphy. Well, I think that they are current statutes
that we are using right now, that they are----
Ms. Titus. Well, this is current. This is current. This is
your own rule for leasing.
Ms. Murphy. So let me go ask my leasing----
Ms. Titus. All right, so that is number 2. What do you have
for three?
Ms. Murphy. The 45-day question was what I had----
Ms. Titus. That is right. How can you get this done in 45
days? It took over a year to do it initially. Now you are going
to investigate somebody they are going to sell the lease to in
45 days? And if you don't get it done, then they can just do it
anyway.
Ms. Murphy. So we have----
Ms. Titus. How did that--how did you come up with that
provision?
Ms. Murphy. I did not, ma'am. That came--that was included
in the lease in 2012, long before I was--I was still working on
the House Small Business Committee in 2012.
Ms. Titus. Well, can you--you think you are going to be
able to get it done in 45?
Ms. Murphy. If 45 days is what we have, 45 days is what we
are going to do. And we are not going to cut corners to do it,
though.
Ms. Titus. Well, that is reassuring. All right, that is
three. What is your fourth?
Ms. Murphy. I am trying to read my own handwriting on my
fourth, ma'am, and I apologize----
Ms. Titus. Well, if you can't read it, and I can't remember
it, we will go on to the next person.
Ms. Murphy. OK.
Ms. Titus [to Mr. Palmer]. You're good?
Mr. DeFazio. Thanks, Madam Chair. So--and here is just a
general question. Is the Constitution--does that trump a
statute?
Ms. Murphy. Yes, sir.
Mr. DeFazio. I mean if the court finds that a statute is in
violation of the Constitution, it goes away, right? I mean that
is a simple question. Yes, OK, that is the answer.
Here, so in this case, emoluments are applied to Members of
Congress by a statute. And in this case, emoluments are applied
to the President of the United States under the Constitution.
So--and we had a discussion earlier about oath of office and
that.
So here is the issue. There are two things that GSA says.
The contracting officer says, well, they can't pierce the LLC,
and that it is a--so we don't really know who is the
beneficiary. And secondly, the contracting officer says the
President wasn't President when he signed the lease. Fair
enough, true. And the Obama administration negotiated the
lease. True. And then Congress reviewed the lease. True, there
was no question of emoluments of--by the President of the
United States. He wasn't President.
Now, on August 2, 2017, at the request of the Acting
Commissioner of GSA Public Buildings Service, the Department of
Justice filed a complaint in the U.S. District Court for the
District of South Carolina, seeking to condemn a leasehold
interest in a minor office space owned by--that is my addition,
``minor''--office space owned by Rice REI, LLC, because,
according to the complaint, contracts between Members of
Congress and the Federal Government are prohibited, and the
lease in question was voided--get this--upon his election and
assumption of office.
Now we get another guy who was elected--I don't know if
your legal opinion says he wasn't, but I think he was elected--
and assumed office. But somehow this is OK. It is in the
Constitution. It is not just a statute. And GSA went to court
because a Member of Congress, a person had--with a minor lease
had gotten elected and assumed office.
Now, why doesn't that apply in this case?
Ms. Murphy. So the statute you are referring to was drafted
and it applies specifically to Congress. You are talking about
a lease versus an outlease. And you are talking about a case
where----
Mr. DeFazio. I don't think there is any distinction between
leases and outleases.
Ms. Murphy. Well, sir, in a lease we needed that space. It
was an FBI office, if I am correct, and--if I am recalling
correctly. And we could not----
Mr. DeFazio. It was leased. And, you know, you went to
court to void the lease. And in this case there is----
Ms. Murphy. I don't think we----
Mr. DeFazio. We don't care. I mean he is President, we have
a secret legal opinion that says it doesn't violate emoluments,
Congress can't see it, and this is routine. It was entered into
under the Obama administration, so it is all good.
You know, this is a remarkable lack of curiosity on the
part of GSA. We allow Trump LLC to self-audit, and we have been
provided--oh, almost 10,000 pages of documents--you provided us
a cover sheet for every self-audit and financial report. The
cover sheet, with even the name of the person who submitted it
redacted. Now, do you think that is forthcoming? Seriously? And
that is adequate for our oversight?
Ms. Murphy. Sir, I--can I address your issue on the legal
memos? Because I think you said something that maybe I can
clarify without violating the attorney-client concerns we had,
which is you suggest that you would like to see the--how those
legal memoranda address the Emoluments Clause.
I have not read those legal memoranda, but my understanding
from the IG's report is that those legal memoranda are not
about the Emoluments Clause, and do not----
Mr. DeFazio. They said that you didn't consider the
Emoluments Clause, but the contracting officer said in
November, in personal correspondence to Ivanka Trump,
everything is hunky dory, this is all a bunch of BS, don't
worry about it.
Ms. Murphy. I am not sure I would agree with----
Mr. DeFazio. That is not exactly a quote, but that is the
gist of what the guy said, this professional who is overseeing
this lease, who you are not concerned about and is eight levels
down, so you can't direct anything that might say, well, gee,
maybe this guy isn't impartial, and maybe we should put someone
else in charge of this, especially if we are now looking at bin
Salman, or Xi Jinping, or, you know, one of Putin's cronies
leasing this hotel.
Thank you, Madam Chair.
Mrs. Fletcher. I just have one followup question that we
were chatting about on this 45 days, because it does concern
me. And it seems that there is some vagueness in the lease
language. So what I see in front of me is that it says if the
landlord fails to respond within 45 days of this tenant
submitting all necessary qualified transferee information, the
landlord tenant shall provide a second written notice, and then
the landlord qualified transferee confirmation shall be deemed
given.
So it seems to me that there is some uncertainty of what it
means to respond, and it certainly seems like we could explore
whether a response is simply providing notice of receipt, and
then implementing a process to thoroughly review and vet and
address some of the concerns that have been raised today in
terms of security, in terms of the prospective purchasers. So
this, I think, is a good area where we could work out a plan.
But my concern continues to be waiting to develop that plan
until receiving notice. So I would love to get your agreement
today that we could work with this committee and with your
office to develop a plan to deal with this, whether it happens
next month or next year or in 10 years, that we can have a plan
going forward that can address some of the concerns with this
45-day provision.
Ms. Murphy. So, Congresswoman, perhaps a good place for us
to start would be if we got some of the GSA experts to meet
with you or your staff and discuss what exactly is covered in
that section 15 provision, what--and what that means. Because
you are raising some very good questions about that, and I
think that would be a great area for us to explore.
Mrs. Fletcher. I think it would be very useful for us to
explore to make sure that the American people are protected
when it comes to the potential transfer of this building, and
also to put steps in place for any of the other major outlease
assets.
So I appreciate that, and we will follow up. Thank you very
much, and I yield back.
Mr. Palmer. I just have a question for Congresswoman
Fletcher.
Are you talking about changes to the current contract, or
to future contracts?
Mrs. Fletcher. Well, as a lawyer who spent a lot of time
interpreting contracts, I think there is some vague language in
this contract about what it means to respond, and whether that
means a full vetting process within 45 days or simply engaging
in a process.
So I think, if we can work out a process that will address
some of the concerns about a transfer, both for this and
forward-looking, ongoing agreements, I think that that would be
very useful for everyone to have that clarity.
Mr. Palmer. Well, the point that I would raise is that the
committee's prospectus is--process is the Constitution, because
it is tied to the need for appropriations. And if you are
talking about making changes to a current contract, there would
be an issue with the client because there are no appropriations
involved. If you are talking about future contracts, I think
that would be appropriate. But----
Mrs. Fletcher. I think the issue here is really dealing
with the vagueness in the agreement, and making sure that some
of the concerns that were raised can be adequately addressed
within a 45-day period.
And so what is a process upon receiving notice, certainly
acknowledging receipt, is important. But this is an area where
I think there could be some confusion as to what the
obligations are, in terms of the receipt and response. And so,
clarifying that could be useful.
Ms. Titus. I think that is pretty clear, Mrs. Fletcher. You
are not changing a contract, you are just clarifying some of
the language as guidance for GSA, as it evaluates and responds
to a prospective sale or lease.
Ms. Murphy. And I only have a summary of the provision in
front of me right now. So I would want to make sure that, you
know, we were talking to our attorneys. And if there is
ambiguity in there, let's talk about--or if I am not correctly
describing what the provision is, or how that 45-day period
governs--that we have that conversation.
Ms. Titus. Thank you. And we have gotten language here in
front of us, so I think it is pretty clear that that is--needs
a little detail put in it so you can be protected as you move
forward, and you will have guidance from us so we can avoid
some of these kind of questions in the future.
Any further questions from the subcommittee?
Thank you. Seeing none, I will thank each--thank you, not
each of our witnesses, but you, Ms. Murphy, for being here with
us today, and for your testimony. It has been very informative
and helpful, and we look forward to working with you as we move
forward on this.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witness can provide answers
to any of the questions that may have been submitted to you,
and I ask unanimous consent that the record remain open for 15
days for any additional comments and information submitted by
Members or our witness to be included in the record of today's
hearing.
Without objection, so ordered.
If no other Members have anything to add, the subcommittee
stands adjourned.
[Whereupon, at 12:10 p.m., the subcommittee was adjourned.]
Appendix
----------
Questions from Hon. Peter A. DeFazio and Hon. Dina Titus to Hon. Emily
W. Murphy, Administrator, U.S. General Services Administration
Selling the Outlease:
Question 1. If the lease for the Trump International Hotel
Washington DC remains with the Trump Organization and Donald J. Trump
is not re-elected as President, then the Trump Organization could
potentially end up with an underperforming asset. What does GSA do when
the owner of an outlease with GSA cannot meet the terms of the
outlease? Is there a standard policy or contingency plan?
Answer. The lease sets forth GSA's rights in the event of a default
by the tenant.
Question 2. What responsibilities remain with the Trump
Organization if the lease is sold?
Answer. The lease contains several ``survivability'' clauses that
remain in effect even if the Trump Old Post Office LLC sells its
leasehold interest. For example, certain record keeping requirements
survive the termination or expiration of the lease. See Lease at
Section 5.4. In addition, certain indemnification and environmental
provisions would also survive. See Lease at Sections 14.1 and 31.2.
Question 3. Please explain how much money taxpayers will receive if
the Trump International Hotel Washington DC outlease is sold for $500
million and how the money received by GSA is calculated?
Answer. The lease addresses how GSA's share of any sale proceeds
would be calculated. Please refer to the Lease at Section 5.2.
Question 4. If the purchaser of the lease is an LLC--how will GSA
know if that's just a front for a Russian oligarch, or a terrorist
organization? What specific steps would GSA take to identify all of the
LLC owners and anyone or any entity that has any financial stake in the
LLC? If it turns out a potential buyer is, in fact, tied to a foreign
entity or government who is attempting to purchase the hotel lease,
will GSA notify Congress about that before allowing the sale to be
completed?
Answer. The lease contains numerous provisions to protect the
Government against an assignment to certain persons. For instance,
Section 37.15 requires the tenant to represent and warrant as follows:
Neither Tenant nor, to Tenant's knowledge, any owner of a
direct or indirect interest in Operator (i) is listed on any
Government Lists, (ii) is a Person who has been determined by
competent authority to be subject to the prohibitions contained
in Presidential Executive Order No. 13224 (Sept. 23, 2001) or
any other similar prohibitions contained in the rules and
regulations of the Office of Foreign Assets Control (``OFAC'')
or in any enabling legislation or other Presidential Executive
Orders in respect thereof, (iii) has been previously indicted
for or convicted of any felony involving a crime or crimes of
moral turpitude or for any Patriot Act Offense, or (iv) is
currently under investigation by any Governmental Authority for
alleged criminal activity. For purposes hereof, the term
``Patriot Act Offense'' means any violation of the criminal
laws of the United States of America or of any of the several
states, or that would be a criminal violation if committed
within the jurisdiction of the United States of America or any
of the several states, relating to terrorism or the laundering
of monetary instruments, including any offense under (A) the
criminal laws against terrorism; (B) the criminal laws against
money laundering, (C) the Bank Secrecy Act, as amended, (D) the
Money Laundering Control Act of 1986, as amended, or (E) the
Patriot Act. ``Patriot Act Offense'' also includes the crimes
of conspiracy to commit, or aiding and abetting another to
commit, a Patriot Act Offense. For purposes hereof, the term
``Government Lists'' means (1) the Specially Designated
Nationals and Blocked Persons Lists maintained by OFAC, (2) any
other list of terrorists, terrorist organizations or narcotics
traffickers maintained pursuant to any of the Rules and
Regulations of OFAC that Landlord notified Tenant in writing is
now included in ``Government Lists'', or (3) any similar lists
maintained by the United States Department of State, the United
States Department of Commerce or any other Government Authority
or pursuant to any Executive Order of the President of the
United States of America that Landlord notified Tenant in
writing is now included in ``Government Lists''.
Section 37.15 further requires the tenant to submit an
organizational chart setting forth ``all direct and indirect ownership
of Tenant and Operator and . . . all information required to be
displayed in accordance with the definition of Organizational Chart in
this Lease.'' Further, the lease defines the term ``Organization
Chart'' as:
a chart . . . showing all direct and indirect ownership of
Tenant and Operator, with names of all Persons thereon, their
relative percentage ownership of Tenant or Operator, the amount
of their Equity as of the date of delivery of such
Organizational Chart and their relationship to one another, and
further showing any other Persons who may have management or
Control rights with respect to Tenant or Operator, without
regard to direct or indirect ownership in Tenant or Operator,
further showing in reasonable detail the nature and amount of
Debt and equity (and the providers thereof) of (x) Tenant and
(y) each other Person which holds a direct or indirect legal or
beneficial ownership or equity interest in Tenant or Operator,
at each tier . . . .
Lastly, GSA will comply with all laws and regulations governing
transactions involving foreign investment in the United States.
Security:
Question 1. Is GSA engaging with the FBI, Department of Justice or
the Secret Service in regard to the potential sale of the lease given
the fact that the Trump International Hotel Washington DC is next to
the Department of Justice and across the street from the FBI
headquarters, since depending on the ownership of the lease it could
pose a national security threat to these agencies?
Answer. GSA has received no information from the tenant regarding
the identity or even existence of a potential buyer. To the extent the
tenant proposes a sale of its interest in the lease, GSA will engage
other agencies if appropriate.
Question 2. The Department of Homeland Security has developed
standards and policies for security in and protection of government-
owned buildings. The Old Post Office Building seems to be particularly
vulnerable from a security perspective--both as a potential target and
as a platform for breaching the electronic or physical security of
nearby high-security buildings such as the FBI headquarters building.
Did GSA or any other Federal entity assess the security risks presented
by the Old Post Office building and its outlease to the Trump
Organization prior to the signing of the lease in 2013? If so, what
countermeasures were identified to mitigate these risks? To what extent
are these countermeasures being implemented?
Answer. In or around December 2012, GSA invited the U.S. Secret
Service (USSS) to share any protective requirements it had in regard to
the Old Post Office site (particularly during inaugural events), with
the goal of possibly incorporating these requirements into the lease
agreement. On April 25, 2013, the USSS requested that GSA incorporate
the following language into the lease: ``In connection with the
Presidential Inaugural Parade, the Lessee shall allow the United States
Secret Service to implement security measures on the leased property.
These security measures may include, but are not limited to, traffic
and pedestrian restrictions, the operation of vehicle and public
screening checkpoints, and the establishment of secured areas.''
As a result of these discussions and the request from the USSS, GSA
negotiated what is now Section 37.24 of the lease, which states:
Tenant hereby acknowledges the usage limitations with respect
to Pennsylvania Avenue during any presidential inauguration
period as set forth in 36 C.F.R. 7.96 and as shown on Exhibit
R, as the foregoing may be amended from time to time. In
connection with the presidential inaugural parade or a threat
to public safety, Tenant hereby agrees to allow the United
States Secret Service to implement security measures on the
Premises and Off-Site Areas. These security measures may
include, but are not limited to, traffic and pedestrian
restrictions, the operation of vehicle and public screening
checkpoints, and the establishment of secured areas.
In addition, in November 2016, the Federal Protective Service (FPS)
issued a Memorandum for the Record to document the Federal Security
Level (FSL) for the Old Post Office building. FPS proposed a FSL 1 for
the building, which is the lowest level of protection. The FSLs are as
follows:
Level I--Minimum
Level II--Low
Level III--Medium
Level IV--High
Level V--Very high
Question 3. Chapter 17 of GSA's Leasing Desk Guide lists
requirements for security agency buy-ins for leased space. The Trump
International Hotel Washington DC lease does not include any security
requirements. Should outleases have security requirements? Especially
when the buildings are in sensitive areas?
Answer. As noted in prior communication with the Subcommittee, GSA
only has a few large outleases on the scale of the Old Post Office
building. For those large outleases, security requirements are best
handled on a case-by-case basis. For example, as noted above, GSA
coordinated security requirements with both the USSS and FPS for the
Old Post Office building. In addition, and by way of further example,
when GSA looked into repositioning the Webster School, which is located
at 940 H Street NW, Washington, DC, GSA included security requirements
as part of the Request for Information issued to potential private
sector developers.
Question 4. GSA's contract with the Trump Organization does not
expressly define actions that the Trump Organization is required to
take to promote the security and protection of the Old Post Office
building. This seems to be an important omission. What will you do to
make clear the lessee's security responsibilities both in the case of
the Trump International Hotel Washington DC outlease and in future
outleases that GSA executes?
Answer. Please refer to the previous response.
Outleasing Policy:
Question 1. Multiple layers of rules and regulations direct GSA's
acquisition of goods, services and leased space. The Federal
Acquisitions Regulations (FAR) is more than 1,000 pages long, GSA's
Acquisitions Manual (the GSAR) is almost 500 pages long and GSA's
Leasing Desk Guide--22 chapters and eight appendices--is almost 900
pages long. Do the FAR, GSAR or the Leasing Desk Guide apply to GSA
outleases? If not, what aspects of these regulations and guidance
should be applied to outleases? What steps do you plan to take to
establish guidance for outleases that you determine is currently
lacking?
Answer. No, outleasing is not subject to the FAR, the GSAR, or the
Leasing Desk Guide, all of which apply to acquisitions.
GSA provides guidance to contracting officers on outleasing
procedures in the Outleasing Program Guide.
Question 2. GSA's brokers and Lease Contracting Officers use a
standard lease form, correct? Why is there no standard outlease form?
Answer. GSA's Outlease Program Guide recommends the use of the form
GSA 3486 (Rev. 10/2013)--U.S. Government Lease of Real Property--for an
outlease in which an interest in real property is conveyed to a non-
Federal entity.
Question 3. GSA's standard form for Leasing Contract Officers
requires that no person holding a federally elected office may directly
or indirectly participate or benefit from the lease. However, the form
only applies to leases. Why is that provision not included in
outleases?
Answer. GSA's Outlease Program Guide recommends the use of the GSA
Form 3486 (Rev. 10/2013)--U.S. Government Lease of Real Property--for
an outlease in which an interest in real property is conveyed to a non-
Federal entity. This form contains the following language:
No member of or delegate to Congress, or Resident Commissioner,
shall be admitted to any share or part of the lease agreement,
or to any benefit that may arise therefrom; but this provision
shall not be construed to extend to any corporation or company
if the agreement be for the general benefit of such corporation
or company.
This language is being updated to refer specifically to lessee
requirements under 18 U.S.C. Sec. 431 and 41 U.S.C. Sec. 6306(a). GSA
will also require any future outleases that do not use Form 3486 to use
the same language.
Question from Hon. Eleanor Holmes Norton to Hon. Emily W. Murphy,
Administrator, U.S. General Services Administration
Question 1. What is the rationale for moving Pretrial Services
Agency (PSA), the Court Services and Offender Supervision Agency
(CSOSA), and the Public Defender Service (PDS) more than a mile from DC
Superior Court and the DC Court of Appeals when the US Attorneys Office
was recently moved only four blocks away?
Answer. In September 2018 GSA transmitted to and briefed the
Committee on a FY 19 lease prospectus and housing plan for the Court
Services and Offender Supervision Agency (CSOSA), Pretrial Services
Agency (PSA), and Public Defender Service (PDS) in Washington, DC. GSA
notes that CSOSA, PSA, PDA, GSA, and the Office of Management and
Budget were in agreement with the proposed delineated area as outlined
in the lease prospectus and the established guidelines in the
subsequent solicitation.
Additionally, GSA took into consideration the needs of the agencies
involved as well as their clients. As a result, the solicitation
includes an exception regarding location parameters, allowing for a far
narrower geographical area than is standard. Furthermore, GSA included
a requirement in the solicitation to address transportation issues to
and from the courthouse that, again, all involved agencies agreed to.
Questions from Hon. Steve Cohen to Hon. Emily W. Murphy, Administrator,
U.S. General Services Administration
Question 1. Please provide a copy of the Tariff Building/Hotel
Monaco outlease and any amendments to the lease.
Answer. As discussed further below, GSA requested, pursuant to
Section 34.1 of the Tariff Building lease, the tenant's consent to
release an unredacted copy of the lease to the Committee. The tenant
declined that request. GSA will work with the tenant, as required by
the lease, to make appropriate redactions. Once that process is
complete, GSA will provide a copy of the redacted lease to the
Committee.
Question 2. Please provide the text of any confidentiality clauses
included in the Tariff Building/Hotel Monaco outlease.
Answer. Section 34.1 of the Hotel Monaco Lease states:
Landlord shall keep confidential, as confidential commercial or
financial information, and shall not divulge to any Person any
Confidential Information, provided, however, Landlord shall not
be precluded from making disclosure regarding Confidential
Information (i) in circumstances in which Tenant consents,
which consent shall not be unreasonably withheld, (ii) to
Landlord's counsel, accountants, and other professional
advisors, who are not employees of Landlord, provided that such
counsel, accountants and advisors are instructed in writing not
to disclose the Confidential Information, (iii) to Landlord's
employees who need to know such information in performance of
their duties on behalf of the United States, and (iv) as
required by law. If Landlord receives a request for
Confidential Information pursuant to FOIA, Landlord shall
promptly notify Tenant of such request and shall follow its
procedures for processing FOIA requests for confidential
commercial or financial information in accordance with the
standards set forth in 41 CFR Part 105-60 as it may be amended
or any successor regulation.
Question 3. How many GSA outleases include a confidentiality
clause?
Answer. With respect to major outleases, it is my understanding
that three include a confidentiality clause.
Question 4. What is the reasoning behind including a
confidentiality clause for the Tariff Building/Hotel Monaco?
Answer. Generally speaking, confidentiality clauses are included in
GSA's leases to protect the business interests of those who do business
with the government.
Question 5. When did the GSA contracting officer submit a request
to the tenant for its consent to release the unredacted copy of the
Tariff Building/Hotel Monaco lease to the Committee?
Answer. The contracting officer requested the tenant's consent to
release an unredacted version of the Tariff Building Lease to the
Committee on March 13, 2020. That request was declined. To the extent
that Commissioner Mathews' response to the Committee's previous
Questions for the Record (QFRs) indicated that the request had already
been made on December 12, 2019, the response was inaccurate. The error,
which was due to an internal miscommunication, was unintentional. Upon
realizing the error shortly after receiving these QFRs, GSA immediately
took action to address it.
Question 6. Has the tenant responded to the GSA contracting
officer's request? If yes, please provide a copy of the tenant's
response.
Answer. The Tenant formally responded to the request on March 19,
2020 that they were not currently comfortable with the release of the
unredacted version of the Ground Lease. They did indicate they would
work with GSA in preparing a redacted version of the Ground Lease if
that would satisfy the Committee.