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Top Republican lawmakers have called for McKinsey to be banned from obtaining federal contracts in the United States following revelations that a think tank led by the consultancy made policy recommendations to China’s central government.
Marco Rubio, vice chairman of the Senate Intelligence Committee, and Michael McCaul, chairman of the House Foreign Affairs Committee, said McKinsey undermined US security through the think tank’s role in developing Beijing’s 13th Five-Year Plan in 2015 . .
“It is shocking that a US company has allegedly supported the Chinese Communist Party’s efforts to develop policies and plans that violate international trade rules and threaten American national security and economic interests,” McCaul told the Financial Times on Friday.
“Companies that support military or human rights abuses by our adversaries should not receive contracts paid for by hard-working American taxpayers.”
McCaul was responding to an FT report that China’s government’s central planning agency had commissioned a McKinsey-led think tank called the Urban China Initiative to produce research for Beijing’s 2016-2020 five-year plan.
That plan committed China to boosting its technological capabilities and contributed to a rise in Sino-American tensions, which has included a more aggressive stance in Washington toward Western companies’ work in China.
Bob Sternfels, McKinsey’s global managing partner, told Congress this month that he was unaware that the firm had ever worked for China’s central government. This week McKinsey confirmed the statement, saying that UCI is a separate entity created in collaboration with two universities and that McKinsey did not author research that UCI performed for China’s National Development and Development Commission. reform.
“It appears that McKinsey has lied repeatedly about its relationship with the Chinese Communist Party,” Rubio told the FT. “We need to know more about McKinsey’s role in helping develop China’s five-year plans, but at this point it is impossible to justify any McKinsey contract with the U.S. government.”
In response to the FT article, Republican Senator Josh Hawley also said that McKinsey should no longer be able to get federal work.
“McKinsey – and any consulting firm that helps China – should be BANNED from obtaining contracts with the US government,” Hawley wrote on X.
A spokesperson for the Democratic staff of the House China Committee said the FT’s report was “deeply concerning” and that the committee would investigate the matter. “We remain committed to understanding how the CCP capitalizes on American expertise and how US experts address conflicts of interest,” he said.
McKinsey declined to comment on the US lawmakers’ statements.
The company has won $1 billion in contracts from the U.S. federal government since 2008, according to the USAspending.gov database, and is also often a subcontractor on projects led by others.
She has been barred from consulting for the Food and Drug Administration for the past three years after her work for opioid makers attracted accusations of conflict of interest, leaving the US Defense Department as the its major federal government client. According to the database, the Pentagon has allocated at least $450 million in work to McKinsey since 2008, and the figure likely understates the total because it excludes sensitive national security contracts.
In the most recent fiscal year, which ended in September 2023, McKinsey received at least $101 million from the federal government, including $63 million from the Pentagon. The company has annual revenue of approximately $16 billion globally.
UCI’s work for Beijing in 2015 came in the form of a 310-page book that advised, among dozens of recommendations, deeper cooperation between the military and Chinese businesses and policies to push foreign companies out of sensitive sectors .
The book is based on the work of McKinsey’s internal research arm, according to an introduction written by Lola Woetzel, founder and co-president of UCI, which is one of McKinsey’s most senior partners in China.
The growing pressure from lawmakers comes as Congress steps up scrutiny of U.S. companies’ business interests and investments in China. The House China Committee, in particular, targeted the companies and asked the CEOs of three American semiconductor makers – Intel, Nvidia and Micron – to testify before Congress.
US companies fear that temperatures could rise further ahead of the US presidential election in November.