Congressman Demands That Pentagon Investigate McKinsey’s Work in China

R epresentative Bob Gibbs (R., Ohio) is demanding that the Department of Defense stop awarding new contracts to McKinsey following reports last year revealing the powerhouse consultancy’s potential conflicts of interest.

In a letter sent on November 14 and obtained this week by National Review, Gibbs expressed concerns about McKinsey sharing “confidential client information across their teams internally” and called on the Pentagon’s acting inspector general Sean O’Donnell to probe the firm’s work and initiate an audit into its operations in China.

“Specifically,” he wrote, “McKinsey’s extensive work for the Department of Defense (DOD) is in dire need of scrutiny given their troubling and extensive work for Chinese companies with close ties to the Chinese Communist Party (CCP) and the Chinese People’s Liberation Army (PLA).”  In addition to blocking McKinsey from receiving new defense contracts, Gibbs wrote, the Pentagon should also review all existing and expired contracts, with a focus on McKinsey’s work with Chinese government–linked entities.

Citing recent revelations from a House Oversight Committee investigation into the consultancy’s work in the opioid industry, Gibbs wrote that McKinsey appears not to have a firewall to prevent work for one client from influencing another. That investigation looked into whether McKinsey’s work for opioid manufacturers benefitted improperly from its work for the Food and Drug Administration. The FDA announced that it would not award McKinsey new contracts “pending the outcome of the investigations.”

Last year, NBC News reported that McKinsey worked with the Pentagon, the CIA, and other sensitive national-security agencies while simultaneously working with the Chinese government and affiliated companies. While McKinsey claimed, in statements to NBC and to Senator Marco Rubio’s staff, that it had “never” worked for China’s central government or military, NR reported that an archived McKinsey website suggested otherwise, touting work completed for Chinese government ministries, among other government organs.

The list of McKinsey’s other Chinese government–linked clients is long, and it includes companies that have, in recent years, been designated as having Chinese government ties by both the Trump and Biden administrations.

“This list includes drone maker DJI and the China Communications Construction Company (CCCC),” wrote Gibbs. “Both were blacklisted by the U.S. Department of Commerce in 2020 over national security concerns. CCCC has even been an essential partner in the Chinese military’s buildup, building artificial island for the Chinese Navy in their aggressive expansion and dubious territorial claims.” In addition, the Pentagon designated DJI as a Chinese military company last month, a charge that the firm contests.

Despite commonplace knowledge of McKinsey’s work with Chinese government–connected entities, though, and efforts from lawmakers on both sides of the aisle to address the problem, in March the Pentagon awarded the firm a $16 million contract to assess bottlenecks within the U.S. ammunition industrial base and to study the ammunition supply chain beyond the continental U.S. The contract also called on McKinsey to evaluate “government-owned, contractor-operated facilities.”

Gibbs, who is retiring at the end of this Congress, isn’t the first lawmaker to demand that McKinsey submit itself to further scrutiny following NBC’s reporting and the House Oversight Committee’s report on the opioid epidemic. Rubio and several GOP lawmakers asked McKinsey for additional information about the firm’s work in China in July, for example, strongly suggesting that a Republican congressional majority would use its power to launch further investigations. Lawmakers might also take up legislation that several senators have already introduced to bar federal contractors from working simultaneously with the U.S. government and those of adversary countries such as China.

Meanwhile, the Pentagon’s Office of Inspector General has confirmed that it received and is reviewing Gibbs’s letter, though a further comment request to the Office of the Secretary of Defense went unanswered. McKinsey also did not respond to NR’s request for comment.