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McKinsey employee here. This isn't a scandal, and is probably required by the FDA client contract and the pharma client contracts. It is normative. The FDA is

McKinsey employee here. This isn't a scandal, and is probably required by the FDA client contract and the pharma client contracts. It is normative. The FDA is fully aware that McKinsey serves pretty much every major pharma company in the world. Pharma companies know McKinsey is likely involved with federal agencies, probably including the FDA. The contracts formed with all organizations will clearly indicate that the relationship is going to remain private. A really important part of working with a big consulting firm is that you keep it internal to the team. For example, the partnership might be serving both sides of a vendor/procurement situation. It is a huge conflict of interest if these two teams talk to each other and risk leaking their side's position. Thus, not only are the teams allowed to talk to each other, they're not allowed to communicate to others that they're working with that client. Nothing unique to McKinsey here. That's how consulting tends to work.

burkaman 5y ago
Did you read the article? > This year ProPublica submitted a Freedom of Information Act request to the FDA seeking records showing that McKensey had disclosed possible conflicts of interest to the agency’s drug-regulation division as part of contracts spanning more than a decade and worth tens of millions of dollars. The agency responded recently that “after a diligent search of our files, we were unable to locate any records responsive to your request.” > McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” > Over the past couple of years, for example, McKinsey’s bankruptcy-advisory practice has paid more than $30 million to the Justice Department and one client’s creditors to settle allegations that it failed to disclose potential conflicts, as required by the federal bankruptcy rules. There is no evidence that McKinsey disclosed their conflicts in this case, and plenty of evidence that they regularly fail to do so when working with the government, in clear breach of contract. If they paid $30 million to make it go away, then by definition it is a scandal. It is also potentially criminal: https://www.nytimes.com/2019/11/08/business/mckinsey-criminal-investigation-bankruptcy.html https://www.nytimes.com/2019/11/08/business/mckinsey-crimina...
- spywaregorilla 5y ago
  IMO, these things get poured over in great detail by legal teams on both sides. The firm's internal controls are strong and are probably considered sufficient to cover those bits, even if the firm is serving competitors. I'm not a lawyer. I don't look at contracts much, but that sounds like a standard clause. It seems... very unlikely to me that propublica has found anything noteworthy here. The bottom line is that all clients sign agreements forbidding them or McKinsey from sharing knowledge of the relationship. That comes with the understanding that there are similar agreements with other companies. McKinsey cannot disclose its relationships with other companies. Recall that presidential candidate who got a ton of flack because he wasn't able to disclose what he did at McKinsey? It wasn't particularly sensitive, iirc. It was just some work with a grocery chain and some other stuff. But its still hard for the firm to allow sharing that information because everything is NDA'd to hell. Bankruptcy, as I understand it, is a different problem, that tends to arise when the firm is serving the company in bankruptcy, or one of its subsidiaries, which is problematic because you don't want to do anything that could benefit your position as a vendor for them... I think. Not particularly well informed, but I get the impression its a complicated ordeal.
  - burkaman 5y ago
    > McKinsey cannot disclose its relationships with other companies. Ok, then it can't take a job with the government. The contract is clear. I'm not a lawyer either, but I do read contracts before I sign them, and this one doesn't sound very complicated. You're right that it is a standard clause. I don't understand why you think it's unlikely that this is noteworthy, and I don't understand your explanation of why the bankruptcy case was different. I agree it might have been worse, hence the criminal investigation, but it sounds like a breach of contract in both cases, possibly even a breach of the exact same standard clause. > the Contractor agrees it shall make an immediate and full disclosure [...] of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias. Can you genuinely say that there are no facts in this case that create even the appearance of bias?
    - 5y ago

burkaman 5y ago

Did you read the article? > This year ProPublica submitted a Freedom of Information Act request to the FDA seeking records showing that McKensey had disclosed possible conflicts of interest to the agency’s drug-regulation division as part of contracts spanning more than a decade and worth tens of millions of dollars. The agency responded recently that “after a diligent search of our files, we were unable to locate any records responsive to your request.” > McKinsey’s contracts with the FDA, which ProPublica obtained after filing a FOIA lawsuit, contained a standard provision obligating the firm to disclose to agency officials any possible organizational conflicts. One passage reads: “the Contractor agrees it shall make an immediate and full disclosure, in writing, to the Contracting Officer of any potential or actual organizational conflict of interest or the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.” > Over the past couple of years, for example, McKinsey’s bankruptcy-advisory practice has paid more than $30 million to the Justice Department and one client’s creditors to settle allegations that it failed to disclose potential conflicts, as required by the federal bankruptcy rules. There is no evidence that McKinsey disclosed their conflicts in this case, and plenty of evidence that they regularly fail to do so when working with the government, in clear breach of contract. If they paid $30 million to make it go away, then by definition it is a scandal. It is also potentially criminal: https://www.nytimes.com/2019/11/08/business/mckinsey-criminal-investigation-bankruptcy.html https://www.nytimes.com/2019/11/08/business/mckinsey-crimina...

spywaregorilla 5y ago
IMO, these things get poured over in great detail by legal teams on both sides. The firm's internal controls are strong and are probably considered sufficient to cover those bits, even if the firm is serving competitors. I'm not a lawyer. I don't look at contracts much, but that sounds like a standard clause. It seems... very unlikely to me that propublica has found anything noteworthy here. The bottom line is that all clients sign agreements forbidding them or McKinsey from sharing knowledge of the relationship. That comes with the understanding that there are similar agreements with other companies. McKinsey cannot disclose its relationships with other companies. Recall that presidential candidate who got a ton of flack because he wasn't able to disclose what he did at McKinsey? It wasn't particularly sensitive, iirc. It was just some work with a grocery chain and some other stuff. But its still hard for the firm to allow sharing that information because everything is NDA'd to hell. Bankruptcy, as I understand it, is a different problem, that tends to arise when the firm is serving the company in bankruptcy, or one of its subsidiaries, which is problematic because you don't want to do anything that could benefit your position as a vendor for them... I think. Not particularly well informed, but I get the impression its a complicated ordeal.
- burkaman 5y ago
  > McKinsey cannot disclose its relationships with other companies. Ok, then it can't take a job with the government. The contract is clear. I'm not a lawyer either, but I do read contracts before I sign them, and this one doesn't sound very complicated. You're right that it is a standard clause. I don't understand why you think it's unlikely that this is noteworthy, and I don't understand your explanation of why the bankruptcy case was different. I agree it might have been worse, hence the criminal investigation, but it sounds like a breach of contract in both cases, possibly even a breach of the exact same standard clause. > the Contractor agrees it shall make an immediate and full disclosure [...] of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias. Can you genuinely say that there are no facts in this case that create even the appearance of bias?
  - 5y ago