UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, 

et al.,

 Debtors. 1

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

SUMMARY SHEET ACCOMPANYING THIRD INTERIM FEE APPLICATION

OF MCKINSEY & COMPANY, INC. WASHINGTON D.C.

AS CONSULTING SERVICES PROVIDER TO THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE OF DEBTORS, 

THE COMMONWEALTH OF PUERTO RICO, FOR THE PERIOD 

FROM FEBRUARY 1, 2018 THROUGH MAY 31, 2018

Name of Applicant: McKinsey & Company, Inc. Washington D.C. 

 (“McKinsey Washington”)

Authorized to Provide Services to: The Financial Oversight and Management Board for 

Puerto Rico, as Representative of the Debtors

Pursuant to PROMESA Section 315(b)

Period for which Compensation

and Reimbursement is Sought: February 1, 2018 through May 31, 2018

Monthly Fee Statements Subject Consolidated Fourth Monthly Fee Statement

to Third Interim Fee Request: for Compensation for Services Rendered 

From February 1, 2018 through April 30, 2018: 

Commonwealth Title III Support,

 1 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number and the last four (4) 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax 

Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last Four Digits of Federal Tax ID: 

8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) 

(Last Four Digits of Federal Tax ID: 3808); and (iv) Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686). (Title III case numbers are listed as Bankruptcy Case numbers due to software limitations).

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dated June 27, 2018

Fifth Monthly Fee Statement for Compensation for 

Services Rendered From May 1, 2018 through May 31, 

2018: Commonwealth Title III Support, 

dated July 16, 2018

Total Fees Requested for Third 

Interim Compensation Period: $7,237,000.00

Total expenses requested for Third

Interim Compensation Period: $0.002

Total fees and expenses requested for

Third Interim Compensation Period: $7,237,000.00

Total fees and expenses paid to date: $0.00

Total fees and expenses subject to 

an Objection: $0.00

Type of Application: Third Interim Fee Application:

Commonwealth Title III Support 

Deadline for parties other than notice 

parties to file objections: August 6, 2018

 2 McKinsey Washington provides services on a fixed fee basis, and as such, seeks no reimbursement of expenses.

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UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, 

et al.,

 Debtors.

3

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

THIRD INTERIM FEE APPLICATION OF MCKINSEY WASHINGTON & COMPANY, 

INC. WASHINGTON D.C. AS CONSULTING SERVICES PROVIDER TO THE 

FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE OF DEBTORS, THE COMMONWEALTH OF PUERTO RICO, FOR 

THE PERIOD FROM FEBRUARY 1, 2018 THROUGH MAY 31, 2018

McKinsey & Company, Inc. Washington D.C. (“McKinsey Washington”), strategic 

consultants to Debtors in the above-captioned cases, respectfully represents:

INTRODUCTION

1. By this third interim fee application (the “Third Interim Fee Application”), McKinsey 

Washington seeks the allowance and payment of compensation for professional services related 

to Commonwealth Title III support rendered pursuant to the Second Amended Order Setting 

 3 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number and the last four (4) 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax 

Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last Four Digits of Federal Tax ID: 

8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) 

(Last Four Digits of Federal Tax ID: 3808); and (iv) Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686). (Title III case numbers are listed as Bankruptcy Case numbers due to software limitations).

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Procedures for Interim Compensation and Reimbursement of Expenses of Professionals [Docket 

Number 3269] (the “Interim Compensation Order”), the applicable provisions of Title 11 of the 

United States Code (the “Bankruptcy Code”), the Federal Rules of Bankruptcy Procedure (the 

“Bankruptcy Rules”), the Local Bankruptcy Rules of the United States Bankruptcy Court for the 

District of Puerto Rico (the “Local Rules”) and Appendix B of the U.S. Trustee’s Guidelines for 

Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 

U.S.C. §330 by Attorneys in Large Chapter 11 Cases Effective as of November 1, 2013 (the “U.S. 

Trustee Guidelines,” and together with the Interim Compensation Order, the Bankruptcy Code, 

the Bankruptcy Rules and the Local Rules, the “Code and Rules”). Pursuant to the Bankruptcy 

Code, the Bankruptcy Rules and the Local Rules, the Certification of Tyler Duvall, a Partner of 

McKinsey Washington, regarding compliance with the statutory and legal authority cited above 

is attached hereto as Exhibit A. 

2. By this Third Interim Fee Application, McKinsey Washington seeks allowance of compensation 

for professional services performed by McKinsey Washington for the period from February 1,

2018 through May 31, 2018 (the "Compensation Period") in the aggregate amount of

$7,237,000.00, representing 100% of fees incurred during the Compensation Period. McKinsey 

Washington submits that allowance and payment of this amount is fully warranted given the 

actual and necessary services rendered to the Debtors by McKinsey Washington, as described in 

this Third Interim Fee Application. The Debtors have not previously paid any amounts in respect 

of the foregoing requested fees and expenses.

BACKGROUND AND JURISDICTION

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3. On May 3, 2017 (the “Petition Date”), the Commonwealth of Puerto Rico (as herein defined), 

by and through the Financial Oversight and Management Board for Puerto Rico (the “Oversight 

Board”), pursuant to section 315(b) of the Puerto Rico Oversight, Management, and Economic 

Stability Act (“PROMESA”), filed a petition (the “Petition”) with the United States District 

Court for the District of Puerto Rico (the “Court”) under Title III of PROMESA.

4. On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation (“COFINA,” and together 

with the Commonwealth (the “Commonwealth”) of Puerto Rico, the “Debtors”), by and through 

the Oversight Board, as COFINA’s representative pursuant to PROMESA section 315(b), filed 

a petition (“COFINA’s Petition,” and together with the Commonwealth’s Petition, the 

“Petitions”) with the Court under Title III or PROMESA. The filings of the Petitions constitute 

orders for relief under Title III of PROMESA.

5. On May 9, 2017, the Debtor filed a motion seeking the joint administration of the Title III cases 

(the “Title III Cases”) for procedural purposes only, pursuant to PROMESA section 304(g) and 

Bankruptcy Rule 1015, made applicable to these Title III Cases by PROMESA section 310. On 

June 1, 2017, the Court ordered that the cases be consolidated for procedural purposes and be 

jointly administered. 

6. On June 15, 2017, an Official Committee of Unsecured Creditors and an Official Committee of 

Retirees was appointed in the Title III case by the United States Trustee for Region 21.

7. On November 8, 2017, the Court entered the First Amended Order Setting Procedures for 

Interim Compensation and Reimbursement of Expenses of Professionals, which directs that 

professionals in the Title III Cases be paid interim compensation and outlines the procedures by 

which professionals are to submit, at four-month intervals, “an application for interim Court 

approval and allowance of the payment of compensation.” 

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8. On June 6, 2018, the Court entered the Second Amended Order Setting Procedures for Interim 

Compensation and Reimbursement of Expenses of Professionals, which amended certain 

provisions regarding the procedures by which professionals are to submit, at four-month 

intervals, “an application for interim Court approval and allowance of the payment of 

compensation.” 

9. This Court has subject matter jurisdiction over this matter pursuant to PROMESA section 306(a). 

Venue is proper in this district pursuant to PROMESA section 307(a).

THE RETENTION OF MCKINSEY WASHINGTON

10. On or about July 3, 2017, McKinsey Washington and the Board entered into a contract setting 

forth consulting services McKinsey Washington would provide in support of the Title III 

litigation (First amendment effective November 1, 2017, second amendment effective April 1, 

2018) (the “Consulting Agreement”), attached hereto as Exhibit B. The scope of work under the 

Consulting Agreement is divided into three (3) distinct workstreams: (i) Commonwealth Title 

III Support; (ii) Title III Support for PREPA; and (iii) Title III Support for HTA. This Third 

Interim Fee Application concerns the first workstream, namely Commonwealth Title III 

Support.4

11. Consistent with how McKinsey Washington serves clients and prices its engagements both for 

the public and private sectors, McKinsey Washington’s fee structure under the Consulting 

Agreement for services related to Commonwealth Title III support was constructed on a monthly 

firm fixed price basis, as set forth below:

 4 McKinsey is simultaneously serving separate Third Interim Fee Applications for compensation for services rendered 

pursuant to the other two (2) workstreams under the Consulting Agreement.

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Period of Performance Fee

February 2018 $1,940,000

March 2018 $1,940,000

April 2018 $1,940,000

May 2018 $1,417,000

12. These monthly rates are similar to rates that McKinsey Washington charges for professional 

services rendered in comparable matters. Such fees are reasonable based on the customary 

compensation in a competitive market.

13. There is no agreement or understanding between McKinsey Washington and any other 

nonaffiliated person for the sharing of compensation to be received for services rendered in the 

Title III Cases.

14. All services performed by McKinsey Washington for which fees are requested herein were 

performed or incurred for and on behalf of the Debtor and were not for any other person or entity.

SUMMARY DESCRIPTION OF SERVICES PERFORMED –

COMMONWEALTH TITLE III SUPPORT

15. Set forth below is a brief summary of the principal matters on which McKinsey Washington

provided services in connection with Commonwealth Title III support during the Compensation 

Period. The summary is not intended to be a detailed description of all the work performed during 

the Compensation Period. The complete details setting forth the day-to-day services provided by 

McKinsey Washington professionals is included in McKinsey Washington’s Consolidated Fourth

Monthly Fee Statement for Compensation For Services Rendered from February 1, 2018 through 

April 30, 2018: Commonwealth Title III Support (the “Consolidated Fourth Monthly Fee 

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Statement”), and in McKinsey Washington’s Fifth Monthly Fee Statement for Compensation For 

Services Rendered from May 1, 2018 through May 31, 2018: Commonwealth Title III Support

(the “Fifth Monthly Fee Statement”), attached hereto as Exhibit C. 

Commonwealth Title III Support

February 2018:

The scope of services and deliverables related to Commonwealth Title III during February 

2018 involved refining the FOMB’s perspective across all aspects of the fiscal plan, including the 

baseline, fiscal measures, and structural reforms. In addition, it involved preparation of the analysis 

and content for major Board strategy sessions, as well as sessions between the Government and the 

Board. The team drove towards finalization of FOMB baseline and measures models, refined 

structural reform initiatives to drive economic growth, and analyzed the Government’s fiscal plan 

for points of divergence. The core activities included working directly with the Board, the Executive 

Director, and Board Staff on the below areas (and providing ad hoc support as needed): 

The core activities and deliverables related to the Commonwealth Title III support during the 

period included:

 Facilitated major Board strategy sessions (including strategy sessions conducted on Feb 2nd, 

Feb 15th, and March 1st and 2nd) to share key analyses, tee up strategic decisions, and help 

prepare Board for government / Governor interactions

 Led diligence of Government Fiscal Plan submissions, including analysis of hundreds of 

discrete data sources and inputs, comparing with FOMB perspective baseline, measures, and 

structural reform scoring; scored Government Fiscal Plan and worked with FOMB staff to 

identify key recommendations and requirements 

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 Crafted content for Board to provide to Government to incorporate into Fiscal Plan (including 

pensions, labor, tax law initiatives, etc.)

 Created a new model structure for final Fiscal Plan model submission, and led government 

through new structure to help translate government model into final format 

 Provided overview of core questions to answer in order to develop a successful county model 

(including, review of potential regionalization / consolidation options, sample county 

structures across mainland, etc.), and investigated best practices in county models

 Refined scoring of Board structural and fiscal reforms (e.g., labor reform impact on growth; 

potential impact of corrections rightsizing) and identified potential implementation 

mechanisms (including of NAP work requirement)

 Updated, maintained, and conducted ongoing quality assurance on hundreds of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

 Refined key estimates that influence the baseline projection of economic activity in Puerto 

Rico (e.g., refined federal disaster spend, revenue collections, Medicaid PMPM estimates, 

etc.) – including by determining implications of Senate Supplemental Bill (Bipartisan Budget 

Act)—including on Medicaid, disaster funding, Puerto Rico’s cost share, etc. 

 Conducted multiple sessions with Government advisors to pressure test assumptions, refine 

data, discuss core ideas underpinning the fiscal plan 

 Provided analysis for Board members as needed (including deep dive on FY18 budget and 

baseline, implication of actual revenue collections for FY18 revenue projections, etc.) 

March 2018:

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The scope of services and deliverables related to Commonwealth Title III during March 2018 

involved refining the FOMB’s perspective across all aspects of the fiscal plan, including the baseline, 

fiscal measures, and structural reforms. In addition, it involved participation in key Government / 

Board Working Groups to drive core outputs for the fiscal plan (including labor reform, tax reform, 

agency efficiencies). The core activities included working directly with the Board, the Executive 

Director, and Board Staff in the below areas (and providing ad hoc support as needed): 

The core activities and deliverables related to the Commonwealth Title III support during the 

period included:

 Provided hundreds of pages of detailed edits / redline on Government March Commonwealth 

Fiscal Plan submission in order to prepare for approach to certification, including drafting 

core sections with FOMB perspectives 

 Drafted overall framing / executive summary for the Fiscal Plan 

 Participated in and helped prepare for key Working Groups to refine tax reform, agency 

efficiencies, and labor reform proposals for final fiscal plan, including preparing content, 

engaging with government collaborators, and codifying outputs 

 Facilitated major Board strategy sessions to share key analyses, tee up strategic decisions, and 

help prepare Board for government / Governor interactions

 Led diligence of Government Fiscal Plan submissions, comparing with FOMB perspective 

baseline, measures, and structural reform scoring; scored Government Fiscal Plan and worked 

with FOMB staff to identify key recommendations and requirements 

 Updated, maintained, and conducted ongoing quality assurance on hundreds of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

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 Conducted multiple sessions with Government advisors to finalize assumptions, refine data, 

discuss core ideas underpinning the fiscal plan, and finalized baseline projection of economic 

activity in Puerto Rico (including refined federal disaster spend, revenue collections, 

Medicaid PMPM estimates, etc.) 

 Crafted long-term projections of Fiscal Plan in collaboration with other FOMB advisors, 

including major assumptions related to inputs for baseline, measures, structural reforms

 Provided ad hoc analysis for Board members as needed (including deep dive on FY18 budget 

and baseline, implication of actual revenue collections for FY18 revenue projections, etc.) 

April 2018:

The scope of services and deliverables related to Commonwealth Title III during April 2018 

involved finalizing the Commonwealth Fiscal Plan and financial model in order to support 

certification. The core activities included working directly with the Board, the Executive Director, 

and Board Staff in the below areas (and providing ad hoc support as needed): 

The core activities and deliverables related to the Commonwealth Title III support during the 

period included:

 Initiated development of Fiscal Plan word document, with hundreds of pages outlining the 

proposed plan, demonstrating savings across timeline of plan, and providing supporting 

documentation and assumptions; incorporated edits of all Board members and FOMB 

advisors to finalize draft

 Facilitated major Board strategy sessions on April 6th,13th, and 19th to share key analyses, tee 

up strategic decisions, and finalize the Fiscal Plan 

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 Finalized financial model to support Fiscal Plan based on final assumptions / inputs and 

projections

 Provided long-term macroeconomic, baseline, measures and structural reform assumptions 

for long-term financial projections and in support of the Debt Sustainability Analysis 

 Supported Board through analysis of potential reinvestment scenarios to enable structural 

reforms 

 Developed Board presentations, talking points, fact pacts, and “FAQ” documents on the 

Fiscal Plan in order to support certification and explanation of plan to various stakeholder 

groups

 Translated Fiscal Plan and supporting exhibits into Spanish 

 Updated, maintained, and conducted ongoing quality assurance on hundreds of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

 Provided ad hoc analysis for Board members as needed (including a comparison of Fiscal 

Plan to March 2017 Certified fiscal plan, etc.)

 Documented all assumptions in preparation for mediation and creditor engagement 

 Began translation of Fiscal Plan into agency line item spend to enable creation of budget 

May 2018:

The scope of services and deliverables related to Commonwealth Title III during May 2018 

involved updating the Commonwealth Fiscal Plan to reflect new policy realities based on the 

Governments decisions related to labor reform. It involved supporting the negotiation of a new 

accommodation between the Government of Puerto Rico and the Board to amend the 

Commonwealth Fiscal Plan (to include repeal of Law 80 and investments to advance reform and 

reduce implementation risk), and then updating the Commonwealth Fiscal Plan and financial model 

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for a new certification at the end of the month (on May 30th). The core activities included working 

directly with the Board, the Executive Director, and Board Staff in the following areas (and 

providing ad hoc support as needed): 

The core activities and deliverables related to the Commonwealth Title III support during the 

period included:

 Fiscal plan update incorporating technical updates and changes arising from accommodation 

reached with the Government 

– Led strategy sessions with Board members, advisors, and staff to understand potential 

changes needed in the Fiscal Plan based on Governor’s proposals 

– Conceptualized and modeled new financial scenarios to help the Board determine the 

revised accommodation with the Government of Puerto Rico

– Reviewed and suggested potential economic development investments as part of the 

accommodation process

– Edited Fiscal Plan word document to integrate new details surrounding the Government 

accommodation

– Investigated impact of new Federal funding announcements revealed following the April 

19th certification for inclusion in the end-of-May Fiscal Plan update

– Researched and refined technical adjustments as part of the Fiscal Plan update process 

– Provided long-term macroeconomic, baseline, measures and structural reform assumptions 

for long-term financial projections and in support of the Debt Sustainability Analysis 

 Organization of May15th creditor mediation session and development of supporting materials 

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– Developed Board presentations, talking points, fact pacts, and “FAQ” documents on the 

Fiscal Plan in order to support certification and explanation of plan to various stakeholder 

groups

– Prepared for and presented at mediation session between the Board and creditor groups on 

May 15th and May 16th

 Ad hoc financial analysis and support regarding development of the updated Fiscal Plan 

model and FY19 budget

– Updated, maintained, and conducted ongoing quality assurance of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

– Supported translation of Fiscal Plan into FY19 budget 

– Developed initial draft of best interest test based on fiscal plan certified April 19, 2018

SUMMARY OF PROFESSIONAL COMPENSATION REQUESTED

16. On December 15, 2018, pursuant to the Interim Compensation Order, McKinsey Washington 

filed its First Interim Fee Application, covering the compensation period July 1, 2017 through 

September 30, 2017 [Docket No. 2073]. The hearing on that application was deferred to July 25, 

2018 [Docket No. 3279]. 

17. On March 16, 2018, pursuant to the Interim Compensation Order, McKinsey Washington filed 

its Second Interim Fee Application, covering the period October 1, 2017 through January 31, 

2018 [Docket No. 2756]. The hearing on that application was deferred to July 25, 2018 [Docket 

No. 3279].

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18. On June 27, 2018, pursuant to the Interim Compensation Order, McKinsey Washington served 

on the Notice Parties (as defined therein) the Consolidated Fourth Monthly Fee Statement for 

services rendered from February 1, 2018 through April 30, 2018 under the Commonwealth Title 

III Support workstream (the “Consolidated Fourth Monthly Fee Period”). 

19. As reflected in the Consolidated Fourth Monthly Fee Statement: Commonwealth Title III 

Support, during the Third Interim Fee Period, McKinsey Washington incurred $5,820,000.00 in 

fees related to Commonwealth Title III Support and sought payment of ninety (90%) percent of 

such fees ($5,238,000.00) in accordance with the Interim Compensation Order. 

20. On July 16, 2018, pursuant to the Interim Compensation Order, McKinsey Washington served 

on the Notice Parties (as defined therein) the Fifth Monthly Fee Statement for services rendered 

from May 1, 2018 through May 31, 2018 under the Commonwealth Title III Support workstream

(the “Fifth Monthly Fee Period”). 

21. As reflected in the Fifth Monthly Fee Statement: Commonwealth Title III Support, during the 

Third Interim Fee Period, McKinsey Washington incurred $1,417,000.00 in fees related to 

Commonwealth Title III Support and sought payment of ninety (90%) percent of such fees

($1,275,300.00) in accordance with the Interim Compensation Order. 

22. To date, McKinsey Washington has not been paid any fees for services rendered during the Third 

Interim Compensation Period.

23. Pursuant to this Third Interim Fee Application, McKinsey Washington seeks an interim 

allowance and payment of $7,237,000.00, representing one hundred (100%) percent of its total 

fees ($) incurred during the Compensation Period. 

THE REQUESTED COMPENSATION SHOULD BE ALLOWED

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24. Section 331 of the Bankruptcy Code provides for interim compensation of professionals and 

incorporates the substantive standards of section 330 to govern the Court's award of such 

compensation. Section 330 of the Bankruptcy Code provides that a court may award a 

professional "reasonable compensation for actual necessary services rendered ... and 

reimbursement for actual, necessary expenses." 11 U.S.C. § 330(a)(1). Section 330 sets forth the 

criteria for the award of such compensation and reimbursement:

In determining the amount of reasonable compensation to be awarded ..., the 

court should consider the nature, the extent, and the value of such services, 

taking into account all relevant factors, including-

(A) the time spent on such services;

(B) the rates charged for such services;

(C) whether the services were necessary to the administration of, or 

beneficial at the time at which the service was rendered toward the completion 

of, a case under this title;

(D) whether the services were performed within a reasonable amount of 

time commensurate with the complexity, importance, and nature of the 

problem, issue, or task addressed;

(E) with respect to a professional person, whether the person is board 

certified or otherwise has demonstrated skill and experience in the bankruptcy 

field; and

(F) whether the compensation is reasonable based on the customary 

compensation charged by comparably skilled practitioners in cases other than 

cases under this title 11 U.S.C. § 330(a)(3).

25. As demonstrated by this Third Interim Fee Application and the exhibits attached hereto, the 

services that McKinsey Washington rendered during the Compensation Period were reasonable, 

necessary and appropriate. McKinsey Washington expended its time economically and without 

unnecessary duplication of effort. In addition, the work conducted was carefully assigned to 

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appropriate professionals, according to the experience and level of knowledge required for each 

particular task. Accordingly, approval of the compensation sought herein is warranted.

CONCLUSION

WHEREFORE, McKinsey Washington respectfully requests that the Court enter an order 

awarding McKinsey Washington an interim allowance and payment of compensation for the 

Compensation Period in the total amount of $7,237,000.00 and granting such other relief as this 

Court deems just and proper.

Dated: July 16, 2018 McKinsey & Company, Inc. Washington DC

Washington DC

 s/ Tyler Duvall 

Tyler Duvall, Partner

McKinsey & Company, Inc. Washington DC

1200 19th Street NW Suite 1100

Washington DC 20036

Telephone: (202) 662 0078

Email: tyler_duvall@McKinsey.com

Strategic Consultant to the Debtor

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Certificate of Service

1. Notice of this Third Interim Fee Application has been or will be provided by overnight delivery 

or e-mail to:

i. attorneys for the Oversight Board, Proskauer Rose LLP, Eleven Times 

Square, New York, NY 10036, Attn: Martin J. Bienenstock, Esq. 

(mbienenstock@proskauer.com) and Ehud Barak, Esq. 

(ebarak@proskauer.com), and Proskauer Rose LLP, 70 West Madison Street, 

Chicago, IL 60602, Attn: Paul V. Possinger, Esq. 

(ppossinger@proskauer.com);

ii. attorneys for the Oversight Board, O’Neill & Borges LLC, 250 Muñoz Rivera

Ave., Suite 800, San Juan, PR 00918, Attn:Hermann D. Bauer, Esq. 

(hermann.bauer@oneillborges.com);

iii. attorneys for the Puerto Rico Fiscal Agency and Financial Advisory 

Authority, O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, 

New York, NY 10036, Attn: John J. Rapisardi, Esq. (jrapisardi@omm.com), 

Suzzanne Uhland, Esq. (suhland@omm.com), and Diana M. Perez, Esq. 

(dperez@omm.com);

iv. attorneys for the Puerto Rico Fiscal Agency and Financial Advisory 

Authority, Marini Pietrantoni Muñiz LLC, MCS Plaza, Suite 500, 255 Ponce 

de León Ave, San Juan, PR 00917, Attn: Luis C. Marini-Biaggi, Esq. 

(lmarini@mpmlawpr.com) and Carolina Velaz-Rivero Esq. 

(cvelaz@mpmlawpr.com);

v. the Office of the United States Trustee for the District of Puerto Rico, Edificio 

Ochoa, 500 Tanca Street, Suite 301, San Juan, PR 00901 (re: In re: 

Commonwealth of Puerto Rico);

vi. attorneys for the Official Committee of Unsecured Creditors, Paul Hastings 

LLP, 200 Park Ave., New York, NY 10166, Attn: Luc. A Despins, Esq. 

(lucdespins@paulhastings.com);

vii. attorneys for the Official Committee of Unsecured Creditors, Casillas, 

Santiago & Torres LLC, El Caribe Office Building, 53 Palmeras Street, Ste. 

1601, San Juan, PR 00901, Attn: Juan J. Casillas Ayala, Esq. 

(jcasillas@cstlawpr.com) and Alberto J.E. Añeses Negrón, Esq. 

(aaneses@cstlawpr.com);

viii. attorneys for the Official Committee of Retired Employees, Jenner & Block 

LLP, 919 Third Ave., New York, NY 10022, Attn: Robert Gordon, Esq. 

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(rgordon@jenner.com) and Richard Levin, Esq. (rlevin@jenner.com), and 

Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654, Attn: Catherine 

Steege, Esq. (csteege@jenner.com) and Melissa Root, Esq. 

(mroot@jenner.com);

ix. attorneys for the Official Committee of Retired Employees, Bennazar, García 

& Milián, C.S.P., Edificio Union Plaza, PH-A, 416 Ave. Ponce de León, Hato 

Rey, PR 00918, Attn: A.J. Bennazar-Zequeira, Esq. (ajb@bennazar.org);

x. the Puerto Rico Department of Treasury, PO Box 9024140, San Juan, PR 

00902-4140, Attn: Reylam Guerra Goderich, Deputy Assistant of Central 

Accounting (Reylam.Guerra@hacienda.pr.gov); Omar E. Rodríguez Pérez, 

CPA, Assistant Secretary of Central Accounting 

(Rodriguez.Omar@hacienda.pr.gov); Angel L. Pantoja Rodríguez, Deputy 

Assistant Secretary of Internal Revenue and Tax Policy 

(angel.pantoja@hacienda.pr.gov); Francisco Parés Alicea, Assistant 

Secretary of Internal Revenue and Tax Policy 

(francisco.pares@hacienda.pr.gov); and Francisco Peña Montañez, CPA, 

Assistant Secretary of the Treasury (Francisco.Pena@hacienda.pr.gov);

xi. attorneys for the Fee Examiner, EDGE Legal Strategies, PSC, 252 Ponce de 

León Avenue, Citibank Tower, 12th Floor, San Juan, PR 00918, Attn: Eyck 

O. Lugo (elugo@edgelegalpr.com); and

xii. attorneys for the Fee Examiner, Godfrey & Kahn, S.C., One East Main Street, 

Suite 500, Madison, WI 53703, Attn: Katherine Stadler 

(BWilliamson@gklaw.com; KStadler@gklaw.com).

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EXHIBIT A

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UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, 

et al.,

 Debtors.

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

CERTIFICATION OF TYLER DUVALL IN SUPPORT OF THIRD INTERIM FEE 

APPLICATION OF MCKINSEY & COMPANY, INC. WASHINGTON D.C. 

AS CONSULTING SERVICES PROVIDER TO THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE OF DEBTORS, 

THE COMMONWEALTH OF PUERTO RICO FOR THE PERIOD 

FROM FEBRUARY 1, 2018 THROUGH MAY 31, 2018

I, Tyler Duvall, certify as follows:

1. I am a Partner in the firm of McKinsey & Company, Inc. Washington DC (“McKinsey 

Washington”). I submit this certification with respect to the third interim fee application 

of McKinsey Washington as consulting services provider in the above-captioned case 

(the "Third Interim Fee Application") for the allowance of compensation for professional 

services rendered during the relevant application period.

2. I make this certification in accordance with the Second Amended Order Setting 

Procedures for Interim Compensation and Reimbursement of Expenses of Professionals, 

entered on June 6, 2018 [Docket Number 3269] (the “Interim Compensation Order").

3. In connection therewith, I hereby certify that:

(a) I have read the Third Interim Fee Application;

(b) To the best of my knowledge, information and belief formed after reasonable inquiry, 

the fees sought in the Third Interim Fee Application are in substantial compliance 

with the Interim Compensation Order and the United States Trustee Guidelines for 

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Reviewing Applications for Compensation and Reimbursement of Expenses Filed 

Under 11 U.S.C. § 330, adopted on January 30, 1996; and

(c) The Debtor, the United States Trustee, the official committee of unsecured creditors

and the official committee of retirees of the Debtor have been provided with a copy 

of the Third Interim Fee Application simultaneously with the filing thereof, and will 

have at least 10 days to review such Third Interim Fee Application prior to any 

objection deadline with respect thereto.

Dated: July 16, 2018

Washington DC 

 /s/ Tyler Duvall 

Tyler Duvall, Partner

McKinsey & Company, Inc. Washington DC

1200 19th Street NW Suite 1100

Washington DC 20036

Telephone: (202) 662 0078

Email: tyler_duvall@McKinsey.com

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EXHIBIT B 

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PROPRIETARY and CONFIDENTIAL

Sensitivity: Confidential 

CONSULTING AGREEMENT 

McKinsey & Company, Inc. Washington D.C. ("McKinsey") and The Financial Oversight and Management 

Board for Puerto Rico (the “Board” or the “Client”) hereby enter into the following terms effective July 3, 2017 in 

connection with consulting services that McKinsey provides to Client for Strategic Consulting support related to the 

Title III Litigation(the “Services”). 

 1. SERVICES. The working arrangements, including scope of the Services and Deliverables (as defined below) 

will be described in each mutually-executed Scope of Work, attached hereto as individual Attachments and incorporated 

herein, and cannot be materially amended without mutual agreement of the Parties. In order to be able to complete the 

Services within the agreed timeframe and budget and to fulfill its responsibilities on a timely basis, McKinsey will rely 

on the Client’s timely cooperation, including the Client and the Government of Puerto Rico’s making available relevant 

data, information and personnel, performing any tasks or responsibilities assigned to the Client or the Government of 

Puerto Rico and notifying McKinsey of any issues or concerns the Client may have relating to the Services. The Client 

is solely responsible for ensuring that the Government of Puerto Rico cooperates with responding to requests for purposes 

of the Services. The parties will meet at mutually agreed times to discuss the progress of the Services and to exchange 

feedback. During the course of the Services, priorities may shift or unexpected events may occur which may necessitate 

changes to the Services. In this event, the parties will jointly discuss the anticipated impact on the Services and agree on 

any appropriate adjustments, including to the scope of work, timeframe and budget. 

 2. COMPENSATION. The Client shall compensate McKinsey on a Firm Fixed Price basis in connection with the 

Services, as set forth in the Attachments. Any payments made by the Board to McKinsey hereunder are expressed net of 

any deductions or withholdings that may be applicable in respect of taxes, duties or levies and the Client will pay those 

amounts to McKinsey, in cleared funds. The parties agree that McKinsey is solely responsible for any applicable 

withholding and payment of taxes with respect to McKinsey Personnel as required by law. Neither party undertakes, 

pursuant to his Agreement or otherwise, to perform or discharge any liability or obligation of the other party, whether 

regulatory or contractual, or to assume any responsibility whatsoever for the conduct of the business or operations of the 

other party. Consistent with the public purpose of the Client’s mandate, this Agreement will be made publicly available 

subject to Section 5 below. McKinsey will invoice the Client for Deliverables in connection with the Services monthly 

or as otherwise set forth in the applicable Proposal. Except for Services provided under retainer, all invoices are to be 

paid in accordance with the court order setting procedures for interim compensation and reimbursement of professionals. 

 3. CONFIDENTIALITY. Subject to applicable public disclosure laws and the disclosure procedures established 

by Client that do not otherwise conflict with terms in this agreement, each Party agrees to keep confidential any 

confidential information furnished by either Party in connection with the Services (“Confidential Information"); 

provided, however, that the Client may disclose Confidential Information from McKinsey as necessary or desirable 

to carry out its statutory duties. The Client agrees to provide McKinsey prior notice of its intent to disclose 

Confidential Information from McKinsey. Without the Client’s explicit consent, McKinsey will disclose Confidential 

Information only to its employees, agents and contractors who have a need to know and are bound to keep it confidential 

and will use Confidential Information only for purposes of performing the Services. Confidential Information shall be 

all information other than information that is (i) or becomes publicly available other than as a result of a breach of this 

agreement, (ii) already known to the Receiving Party, (iii) independently acquired or developed by the Receiving Party 

without violating any of its obligations under this agreement, or (iv) is legally required to be disclosed. All documents 

supplied by the Receiving Party Client in connection with the services hereunder will, upon written request, be 

returned by the Receiving Party to the Disclosing Party or destroyed, provided that the Receiving Party may retain 

a copy for archival purposes. In performing the Services, McKinsey will use and rely primarily on the Confidential 

Information and on information available from public sources without having independently verified the same and does 

not assume responsibility for the accuracy or completeness of the Confidential Information or such other publicly 

available information and Section 5 herein. 

 4. INTELLECTUAL PROPERTY. Upon payment in full of McKinsey’s Fees associated with the relevant 

Services, the Client will own all reports, financial models and other deliverables prepared for and furnished to the Client 

by McKinsey in connection with the Services (the “Deliverables”), save that McKinsey retains ownership of all concepts, 

know-how, tools, frameworks, models, and industry perspectives developed or enhanced outside of or in connection with 

the Services (the “McKinsey Tools”), it being understood that none of the McKinsey Tools will contain the Client’s 

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2

Sensitivity: Confidential 

Confidential Information. To the extent the Deliverables include any McKinsey Tools, McKinsey hereby grants the Client 

a non-exclusive, non-transferable, non-sublicenseable, worldwide, royalty-free license to use and copy the McKinsey 

Tools solely as part of the Deliverables and subject to the limitations herein on disclosure of McKinsey materials and 

publicity. 

 5. DISCLOSURE OF McKINSEY MATERIALS; PUBLICITY. McKinsey’s work for the Client is confidential 

and for the Client’s internal use only; provided, however, the Client may disclose such work to the extent such disclosure 

is necessary or desirable to carrying out the Client’s statutory duties. The Client agrees that it will not disclose 

McKinsey’s name in relation to any disclosure of work hereunder without McKinsey’s consent. McKinsey will not 

disclose the Deliverables to any third parties (including any non-voting Board members) without the Client’s prior written 

permission. McKinsey further agrees not to use the Client’s name in any communication with any third party without the 

other party’s prior written permission, including in press releases or other public announcements. If the Client receives 

a public records request for Deliverables or other documents containing McKinsey information, the Client will allow 

McKinsey the ability to review the documents prior to disclosure to advise if the documents contain information subject 

to an exception or exemption to the relevant public records law. 

 6. SERVING COMPETITORS. It is McKinsey’s long-standing policy to serve competing clients and clients with 

potentially conflicting interests as well as counter-parties in merger, acquisition and alliance opportunities, and to do so 

without compromising McKinsey’s professional responsibility to maintain the confidentiality of client information. 

Consistent with such practice and McKinsey’s confidentiality obligations to its other clients, McKinsey is not able to 

advise or consult with the Client about McKinsey’s serving the Client’s competitors or other parties. To avoid situations 

of potential conflict, McKinsey will not, for a period of one year following an engagement for the Client, assign any 

consultant who receives Confidential Information in connection with such engagement to a competitively sensitive 

project, including a directly-conflicting engagement with the Government of Puerto Rico. Notwithstanding the 

foregoing, the Client understands and agrees that so long as McKinsey has appropriate procedures in place to mitigate 

any potential conflict, it may serve the Government of Puerto Rico on related matters. 

 7. INDEMNIFICATION. 

 (a) Deliverables produced hereunder are not intended as a substitute for financial, investment, legal, accounting or 

other professional advice, and McKinsey does not intend to supplant the Client or the Government of Puerto Rico’s 

management or other decision-making bodies. 

 (b) The Client and the Government of Puerto Rico remain solely responsible for its decisions, actions, use of the 

Deliverables and compliance with applicable laws, rules and regulations. McKinsey agrees to indemnify and hold the 

Client harmless from and against all loss, liability, damage, cost, or expense (including reasonable attorney fees) 

(“Losses”) to the extent those Losses are determined by a final, non-appealable order or arbitral award to have resulted 

from McKinsey’s gross negligence or willful misconduct in the performance of the Services. 

 (c) The Client agrees to indemnify and hold McKinsey harmless from any Losses (including the costs of McKinsey’s 

professional time) relating to the Services (including any Losses asserted by the Client, its agents or representatives, or 

third parties and any Losses sustained by McKinsey when participating in any legal, regulatory, or administrative 

proceeding relating to the Services), except to the extent those Losses are determined by a final, non-appealable order or 

arbitral award to have resulted from McKinsey’s gross negligence or willful misconduct in the performance of the 

Services. 

 (d) The Client further indemnifies McKinsey, including any member, officer or employee thereof including but not 

limited to the Revitalization Coordination role, in any instance where it is a party, or is threatened to be made a party, to 

any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, 

against judgments, fines, amounts paid in settlement and expenses (including attorneys’ fees) actually and reasonably 

incurred by him or her in connection with such action, suit or proceeding, unless it acted with bad faith or engaged in 

intentional misconduct and, with respect to any criminal action or proceeding, unless it knew or should have known the 

conduct was unlawful. The termination of any act, suit or proceeding by judgment, order, settlement, conviction, or upon 

a plea of nolo contender or its equivalent, shall not, of itself, create a presumption that McKinsey (or any of its members, 

officers or employees) did not satisfy these standards. 

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Sensitivity: Confidential 

Neither party will be liable for any lost profits or other indirect, consequential, incidental, punitive or special damages. 

In no event shall McKinsey’s liability to the Client in connection with the Services relating to an engagement for the 

Client exceed the amount paid to McKinsey by the Client in connection with such engagement. 

 8. AUTHORITY OF THE BOARD. The Client represents and warrants it has the authority to enter into this 

Agreement for the Services. In the event that it is determined that the Client did not have authority to authorize all or 

part of this agreement, McKinsey may make the sole determination as to whether to terminate the Agreement according 

to Section 10 herein, or continue with those parts of the Services for which the Client does have authority. The Client 

agrees to indemnify and hold McKinsey harmless from any Losses (including the costs of McKinsey’s professional time) 

resulting from a breach of this Section 8 and/or a misrepresentation by the Client of authority to act (including any Losses 

asserted by the Client, its agents or representatives, or third parties and any Losses sustained by McKinsey when 

participating in any legal, regulatory, or administrative proceeding relating to the Services). 

 9. CONFLICTS OF INTEREST. The Client agrees that performance of Services hereunder shall not conflict 

McKinsey from serving the Government of Puerto Rico or any stakeholders to the work, subject to the restrictions in 

Section 6 – “Serving Competitors.” 

 10. TERM AND TERMINATION. This agreement takes effect on the date the Services commenced and shall 

continue until terminated in accordance with its terms. Either party may terminate the Services at any time effective 

upon 30 days written notice to the other. In the event of any termination, the Client will pay McKinsey for the work 

completed up to the effective date of termination. 

 11. MISCELLANEOUS. This agreement and the Proposals constitute the entire agreement between the parties, and 

there are no prior or contemporaneous oral or written representations, understandings or agreements relating to this 

subject matter that are not fully expressed herein or therein. This agreement and the Proposals shall be governed by and 

construed in accordance with the laws of the State of New York without regard to conflicts of law principles and shall 

inure to the benefit of and be binding on the successors and assigns of the Client and McKinsey. The following Sections 

shall survive the completion or any termination of the Services: 3 (Confidentiality), 4 (Intellectual Property), 5 

(Disclosure of McKinsey Materials; Publicity), 6 (Serving Competitors), 7 (Indemnification), 8 (Term and Termination) 

and 9 (Miscellaneous) and any other provision which by law or by its nature should survive. Neither party may assign 

its rights or obligations under this agreement to any person or entity without the written consent of the other party, not to 

be unreasonably withheld, provided, however, that either party may assign its rights and obligations under this agreement 

to its affiliates upon reasonable written notice to the other party but without the written consent of the other party. 

Assignment shall not relieve either party of its obligations hereunder. McKinsey is an independent contractor and not 

the Client’s agent or fiduciary. Notwithstanding any course of dealings of the parties at any time or any statement to the 

contrary contained therein, no purchase order, invoice or other similar document issued by a party shall be construed to 

modify the terms of this agreement. Rights and remedies provided in this agreement are cumulative and not exclusive 

of any right or remedy provided at law or in equity. 

The Financial Oversight and Management Board for Puerto Rico McKinsey & Company, Inc., Washington D.C. 

(Client)

 

_________________________________ _________________________________ 

Name: Name: Tyler Duvall 

Title: Title: Partner 

Date: Date: September 8, 2017 

 

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Sensitivity: Confidential 

ATTACHMENT 1 

Scope of Work 

For 

Commonwealth Title III Support 

Services: 

In regards to support for the Commonwealth Title III proceedings to the Board to include: 

Activities: 

 Participation in and coordination of cross advisor meetings (Board, Commonwealth and/or 

Stakeholders) regarding Title III related matters 

 Preparation of materials necessary for supporting Fiscal Plan litigation, which could include: 

 Assemble fact base regarding process for creation, stress testing and certification of the fiscal 

plan 

 Assemble fact base regarding additional analyses created for the FOMB with respect to 

evaluating/stress testing the FY18 fiscal plan 

 Collect and summarize key input sources and supporting analysis for key fiscal plan assumptions 

 Assemble fact base regarding process and supporting analysis used to identify and evaluate key 

measures proposed and finally included in the fiscal plan 

 Prepare and/or evaluate alternative fiscal plan scenario analyses in support of requested 

alternative contexts 

 Prepare analyses in support of litigation activities 

 As needed, ad-hoc analyses and/or responses to questions regarding litigation or potential litigation 

relating to the Fiscal Plan or other Commonwealth Title III matters 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverable: 

 Monthly report regarding liquidity performance and strategic choices on liquidity related to Title III 

proceedings and/or ad hoc analysis performed within that month.

Support Structure and Cost: 

 The cost for this work will be $740,000 per month and will continue so long as the 

Commonwealth Title III process continues or the Board no longer believes the support is 

necessary. 

 If additional deliverables are required by McKinsey beyond this core support this contract 

will be amended to reflect any required support.

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Sensitivity: Confidential 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

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Sensitivity: Confidential 

ATTACHMENT 2 

Scope of Work 

for 

Title III Support for PREPA 

Services: 

In regards to work specifically supporting the Title III proceedings for the Board with relation to 

PREPA, McKinsey will support the Board in the following ways: 

1. Coordinate and provide analysis related to development of the transformation plan and plan 

of arrangement for PREPA

Activities: 

The core activities include working directly with the Board, the Executive Director and Board Staff 

in the following areas (as well as ad hoc and as needed support): 

 Establishment of the PREPA working group for Title III, including working group protocol, 

governance, cadence, targets and coordination 

 Lead PREPA working group for Title III, including leading meetings, developing core 

materials, workplans, agendas and coordination with PREPA, AAFAF and its experts and 

advisors 

 Develop transformation plan for PREPA for Title III which includes but is not limited to: 

 - Operational stabilization plans focused on near and immediate term actions to maintain 

sustainable operations and launch capex programs with specific implementation plans, 

resourcing and costing supporting their delivery 

 - Debt restructuring terms and plans, agreed with creditors to the extent possible 

 - Detailed privatization/corporatization plans supported by financial models and market 

engagement 

 - Detailed action plans to implement all measures identified in the Fiscal Plans with 

additional measures to achieve Board targets 

 - Governance and management plans that will enable delivery of actions 

 - Stakeholder management plans and demonstrable success in engaging key stakeholders 

 such as regulators 

 - Macro-resource planning when required (e.g. updated IRP for PREPA) 

 - Clear assessments of economic and social impacts on the people of Puerto Rico 

 - Clear timelines for delivery of the plan 

 Coordinate development of and approval by the Board of other submissions related to the 

Title III proceedings, including Plans of Arrangements, financial disclosure, implementation 

plans, contract assumption and rejection 

 Work with Board management and Board PREPA subcommittee to provide updates and take 

guidance on PREPA transformation and Title III 

 Monitor implementation of all aspects of the PREPA transformation plans and Title III plans 

 Escalating deviations from plans and defining solutions for compliance 

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Sensitivity: Confidential 

 Conduct limited market engagement as necessary to identify potential privatization options 

for PREPA 

 Lead development of an integrated resource plan for PREPA to support the Transformation 

Plan in coordination with PREC and PREPA 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverables: 

A monthly report describing progress against transformation objectives, as well as specific 

supporting analyses, including: 

 

 Detailed action plans, including e.g. structural solutions, governance, likely economic 

impacts and operational stabilization 

 Synopsis of market perspectives related to different potential options 

 Integrated resource plan 

Support Structure and Cost: 

 The cost for this work will be $740,000 per month and will continue so long as the Title III 

process continues or the Board no longer believes the support is necessary. 

 If additional deliverables are required by McKinsey beyond this core support this contract 

will be amended to reflect any required support. 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

 

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Sensitivity: Confidential 

ATTACHMENT 2 

Scope of Work 

for 

Title III Support for HTA 

Services: 

In regards to work specifically supporting the Title III proceedings for the Board with relation to HTA, 

McKinsey will support the Board in the following ways: 

Coordinate and provide analysis related to development of the transformation plan and plan of 

arrangement for HTA

Activities: 

The core activities include working directly with the Board, the Executive Director and Board Staff 

in the following areas (as well as ad hoc and as needed support): 

 Establishment of the HTA working group for Title III, including working group protocol, 

governance, cadence, targets and coordination 

 Lead HTA working group for Title III, including leading meetings, developing core 

materials, workplans, agendas and coordination with HTA, AAFAF and its experts and 

advisors 

 Develop transformation plan for HTA for Title III which includes but is not limited to: 

 - Operational stabilization plans focused on near and immediate term actions to maintain 

sustainable operations and launch capex programs with specific implementation plans, 

resourcing and costing supporting their delivery 

 - Debt restructuring terms and plans, agreed with creditors to the extent possible 

 - Detailed privatization/corporatization plans supported by financial models and market 

engagement 

 - Action plans to implement all measures identified in the Fiscal Plans with additional 

measures to achieve Board targets 

 - Governance and management plans that will enable delivery of actions 

 - Stakeholder management plans and demonstrable success in engaging key stakeholders 

 such as regulators 

 - Macro-resource planning when required 

 - Clear assessments of economic and social impacts on the people of Puerto Rico 

 - Clear timelines for delivery of the plan 

 Coordinate development of and approval by the Board of other submissions related to the 

Title III proceedings, including Plans of Arrangements, financial disclosure, implementation 

plans, contract assumption and rejection 

 Work with Board management and Board HTA subcommittee to provide updates and take 

guidance on HTA transformation and Title III 

 Monitor implementation of all aspects of the HTA transformation plans and Title III plans 

 Escalating deviations from plans and defining solutions for compliance 

 Support litigation related to the HTA proceedings, which has commenced 

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Sensitivity: Confidential 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverables: 

A monthly report describing progress against transformation objectives, as well as specific 

supporting analyses, including: 

 

 Detailed action plans, including e.g. structural solutions, governance, likely economic 

impacts and operational stabilization 

 Synopsis of market perspectives related to different potential options 

 Integrated resource plan 

Support Structure and Cost: 

 The cost for this work will be $720,000 per month and will continue so long as the HTA 

Title III process continues or the Board no longer believes the support is necessary. 

 If additional deliverables are required by McKinsey beyond this core support, this contract 

will be amended to reflect any required support. 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

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EXHIBIT C 

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UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.1

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

CONSOLIDATED FOURTH MONTHLY FEE STATEMENT OF MCKINSEY & 

COMPANY, INC. WASHINGTON D.C. FOR COMPENSATION FOR 

SERVICES RENDERED FROM FEBRUARY 1, 2018 THROUGH APRIL 30, 2018

Name of Professional: McKinsey & Company, Inc. Washington D.C. 

 (“McKinsey Washington”)

Authorized to Provide Services to: The Financial Oversight and Management Board for 

Puerto Rico, as Representative of the Debtors 

Pursuant to PROMESA Section 315(b)

Period for which compensation

and reimbursement is sought: February 1, 2018 – April 30, 2018

Amount of compensation sought

as actual, reasonable and necessary: $5,820,000

Amount of expense reimbursement sought

sought as actual, reasonable and necessary2

: $0.00

Type of Fee Statement: Consolidated Fourth Monthly Fee Statement: 

Commonwealth Title III Support3

 1 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number and the last four (4) 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax 

Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last Four Digits of Federal Tax ID: 

8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) 

(Last Four Digits of Federal Tax ID: 3808); and (iv) Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686). (Title III case numbers are listed as Bankruptcy Case numbers due to software limitations).

2 McKinsey provides services on a fixed fee basis, and as such, seeks no reimbursement of expenses.

3 Notice of this Consolidated Fourth Monthly Fee Statement (as defined herein) has been served in accordance with 

the Interim Compensation Procedures (as defined herein) and objections to payment of the amounts described in 

this Monthly Fee Statement shall be addressed in accordance with the Interim Compensation Procedures.

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1. Pursuant to the Interim Compensation Procedures, first entered by the Court on November 8, 

2017 [First Amended Order Setting Procedures for Interim Compensation and Reimbursement 

of Expenses of Professionals, Docket Number 1715] and amended on June 6, 2018 [Second 

Amended Order Setting Procedures for Interim Compensation and Reimbursement of

Expenses of Professionals, Docket Number 3269] (the “Interim Compensation Procedures”), 

the applicable provisions of the United States Code (the “Bankruptcy Code”), the Federal 

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and the Local Bankruptcy Rules for 

the United States Bankruptcy Court for the District of Puerto Rico (the “Local Rules”), 

McKinsey & Company, Inc. Washington DC (“McKinsey Washington”), strategic consultants 

to The Financial Oversight And Management Board For Puerto Rico (the “Debtors” or the 

“Board”), hereby serves this Consolidated Fourth Monthly Fee Statement for the allowance of 

compensation for reasonable and necessary strategic consulting services and support that 

McKinsey Washington provided during the months of February, March and April 2018 (the 

“Fee Period”) pursuant to the “Commonwealth Title III Support” Scope of Work of the 

consulting agreement between McKinsey Washington and the Board for consulting services in 

support of the Title III litigation (Contract dated July 3, 2017, with Amendment No. 1 effective 

November 1, 2017 and Amendment No. 2 effective April 1, 2018 (the “Consulting 

Agreement”) and attached hereto as Exhibit A. Pursuant to the Bankruptcy Code, the 

Bankruptcy Rules the Local Rules, and the Interim Compensation Procedures (Section 11.a.), 

a Certification of Tyler Duvall, a Partner of McKinsey Washington, regarding compliance with 

the statutory and legal authority cited above is attached hereto as Exhibit B. Pursuant to the 

Interim Compensation Procedures (Section 11.b.), a Certification of Natalie Jaresko, Executive 

Director of the Board, authorizing the submission of this Consolidated Fourth Monthly Fee 

Statement, is attached as Exhibit C.

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2. By this Consolidated Fourth Monthly Fee Statement: Commonwealth Title III Support, 

McKinsey Washington seeks allowance of compensation for services rendered under the 

Consulting Agreement during the Fee Period in the amount of $5,238,000 (which equals 90% 

of the compensation sought herein, in accordance with Section 2.c of the Interim Compensation 

Procedures). 

Summary of Services Rendered During the Fee Period

3. During the Fee Period, McKinsey Washington provided a focused range of professional 

services as requested by the Board and reflected in the Consulting Agreement Scope of Work 

for Consulting Agreement Commonwealth Title III Support.

3

4. Included at Exhibit D is a list of team members who performed services during the Fee Period, 

along with a detailed description of McKinsey Washington’s scope of services, deliverables 

and team member activities, pursuant to the Commonwealth Title III Support Scope of Work 

during the Fee Period.

5. Included at Exhibit E is a copy of McKinsey Washington’s monthly invoices4 for fees incurred 

during the Fee Period pursuant to the Consulting Agreement in support of the Commonwealth 

Title III Scope of Work. McKinsey Washington’s fees – as agreed-upon in the Consulting 

Agreement and reflected in the invoices – are based on the usual and customary fees McKinsey 

Washington charges to clients and are commensurate with the services performed. As reflected 

 3 McKinsey is simultaneously serving separate consolidated monthly fee statements for services rendered pursuant to 

the other two (2) Scopes of Work under the Consulting Agreement.

4 The invoice included at Exhibit E reflects Puerto Rico withholding tax (29%), which is applicable to payments for 

services performed in Puerto Rico. In accordance with the terms of the Consulting Agreement, McKinsey has 

calculated the proportion of fees attributable to work performed in Puerto Rico and determined the applicable tax to 

be withheld by the client for payment to the Puerto Rico tax authorities. The net amount reflected on the invoice to be 

collected by McKinsey is consistent with the terms of the Consulting Agreement.

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4

in Exhibit E, McKinsey Washington incurred $5,820,000 in fees during the Fee Period, and 

now seeks reimbursement for 90% of such fees ($5,238,000).

6. The efforts expended by McKinsey Washington during the Fee Period have been 

commensurate with the size and complexity of these cases. In rendering these services, 

McKinsey Washington has made every effort to maximize the benefit to the Debtors, to work 

efficiently with the other professionals employed in these cases, and to leverage staff 

appropriately in order to minimize duplication of effort.

7. McKinsey Washington respectfully submits that the amounts applied for herein for 

professional services rendered on behalf of the Board in these cases to date are fair and 

reasonable given: (a) the time expended; (b) the nature and extent of the services performed at 

the time at which such services were rendered; and (c) the value of such services.

Representations

8. While every effort has been made to include all fees incurred by McKinsey Washington during 

the Fee Period, some fees may not be included in this Consolidated Fourth Monthly Fee 

Statement: Commonwealth Title III Support due to certain unavoidable delays caused by 

accounting and processing during the Fee Period. McKinsey Washington reserves the right to 

make further application(s) for allowance of such fees not included herein. Subsequent fee 

statements and applications will be filed in accordance with the Bankruptcy Code, the 

Bankruptcy Rules, the Local Rules, and the Interim Compensation Procedures.

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Notice

9. Notice of this Consolidated Fourth Monthly Fee Statement: Commonwealth Title III Support

has been or will be provided by overnight delivery or e-mail to:

i. attorneys for the Oversight Board, Proskauer Rose LLP, Eleven Times 

Square, New York, NY 10036, Attn: Martin J. Bienenstock, Esq. 

(mbienenstock@proskauer.com) and Ehud Barak, Esq. 

(ebarak@proskauer.com), and Proskauer Rose LLP, 70 West Madison 

Street, Chicago, IL 60602, Attn: Paul V. Possinger, Esq. 

(ppossinger@proskauer.com);

ii. attorneys for the Oversight Board, O’Neill & Borges LLC, 250 Muñoz 

Rivera Ave., Suite 800, San Juan, PR 00918, Attn:Hermann D. Bauer, Esq. 

(hermann.bauer@oneillborges.com);

iii. attorneys for the Puerto Rico Fiscal Agency and Financial Advisory 

Authority, O’Melveny & Myers LLP, Times Square Tower, 7 Times 

Square, New York, NY 10036, Attn: John J. Rapisardi, Esq. 

(jrapisardi@omm.com), Suzzanne Uhland, Esq. (suhland@omm.com), and 

Diana M. Perez, Esq. (dperez@omm.com);

iv. attorneys for the Puerto Rico Fiscal Agency and Financial Advisory 

Authority, Marini Pietrantoni Muñiz LLC, MCS Plaza, Suite 500, 255 

Ponce de León Ave, San Juan, PR 00917, Attn: Luis C. Marini-Biaggi, Esq. 

(lmarini@mpmlawpr.com) and Carolina Velaz-Rivero Esq. 

(cvelaz@mpmlawpr.com);

v. the Office of the United States Trustee for the District of Puerto Rico, 

Edificio Ochoa, 500 Tanca Street, Suite 301, San Juan, PR 00901 (re: In re: 

Commonwealth of Puerto Rico);

vi. attorneys for the Official Committee of Unsecured Creditors, Paul Hastings 

LLP, 200 Park Ave., New York, NY 10166, Attn: Luc. A Despins, Esq. 

(lucdespins@paulhastings.com);

vii. attorneys for the Official Committee of Unsecured Creditors, Casillas, 

Santiago & Torres LLC, El Caribe Office Building, 53 Palmeras Street, Ste. 

1601, San Juan, PR 00901, Attn: Juan J. Casillas Ayala, Esq. 

(jcasillas@cstlawpr.com) and Alberto J.E. Añeses Negrón, Esq.

(aaneses@cstlawpr.com);

viii. attorneys for the Official Committee of Retired Employees, Jenner & Block 

LLP, 919 Third Ave., New York, NY 10022, Attn: Robert Gordon, Esq. 

(rgordon@jenner.com) and Richard Levin, Esq. (rlevin@jenner.com), and 

Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654, Attn: 

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Catherine Steege, Esq. (csteege@jenner.com) and Melissa Root, Esq. 

(mroot@jenner.com);

ix. attorneys for the Official Committee of Retired Employees, Bennazar, 

García & Milián, C.S.P., Edificio Union Plaza, PH-A, 416 Ave. Ponce de 

León, Hato Rey, PR 00918, Attn: A.J. Bennazar-Zequeira, Esq. 

(ajb@bennazar.org);

x. the Puerto Rico Department of Treasury, PO Box 9024140, San Juan, PR 

00902-4140, Attn: Reylam Guerra Goderich, Deputy Assistant of Central 

Accounting (Reylam.Guerra@hacienda.pr.gov); Omar E. Rodríguez Pérez, 

CPA, Assistant Secretary of Central Accounting 

(Rodriguez.Omar@hacienda.pr.gov); Angel L. Pantoja Rodríguez, Deputy 

Assistant Secretary of Internal Revenue and Tax Policy 

(angel.pantoja@hacienda.pr.gov); Francisco Parés Alicea, Assistant 

Secretary of Internal Revenue and Tax Policy 

(francisco.pares@hacienda.pr.gov); and Francisco Peña Montañez, CPA, 

Assistant Secretary of the Treasury (Francisco.Pena@hacienda.pr.gov);

xi. attorneys for the Fee Examiner, EDGE Legal Strategies, PSC, 252 Ponce 

de León Avenue, Citibank Tower, 12th Floor, San Juan, PR 00918, Attn: 

Eyck O. Lugo (elugo@edgelegalpr.com); and

xii. attorneys for the Fee Examiner, Godfrey & Kahn, S.C., One East Main 

Street, Suite 500, Madison, WI 53703, Attn: Katherine Stadler 

(KStadler@gklaw.com).

WHEREFORE, McKinsey Washington respectfully requests payment by the Debtors of 

$5,238,000, representing 90% of its fees incurred during the Fee Period and requested herein. 

Dated: June 27, 2018 McKinsey & Company, Inc. Washington DC

Washington DC 

 s/Tyler Duvall 

Tyler Duvall

Partner

McKinsey & Company, Inc. Washington DC

1200 19th St NW #1000

Washington, DC 20036

Telephone: (202) 662-3100

Email: Tyler_Duvall@Mckinsey.com

Strategic Consultant to the Debtors

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EXHIBIT A

Consulting Services Agreement

Between McKinsey Washington and the Board 

In Support of the Title III Litigation 

(entered in on or about and July 3, 2017, Amendment No. 1 effective 

November 1, 2017, Amendment No. 2 effective April 1, 2018 

(the “Consulting Agreement”) 

Statement of Work for Commonwealth Title III Support

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PROPRIETARY and CONFIDENTIAL

Sensitivity: Confidential 

CONSULTING AGREEMENT 

McKinsey & Company, Inc. Washington D.C. ("McKinsey") and The Financial Oversight and Management 

Board for Puerto Rico (the “Board” or the “Client”) hereby enter into the following terms effective July 3, 2017 in 

connection with consulting services that McKinsey provides to Client for Strategic Consulting support related to the 

Title III Litigation(the “Services”). 

 1. SERVICES. The working arrangements, including scope of the Services and Deliverables (as defined below) 

will be described in each mutually-executed Scope of Work, attached hereto as individual Attachments and incorporated 

herein, and cannot be materially amended without mutual agreement of the Parties. In order to be able to complete the 

Services within the agreed timeframe and budget and to fulfill its responsibilities on a timely basis, McKinsey will rely 

on the Client’s timely cooperation, including the Client and the Government of Puerto Rico’s making available relevant 

data, information and personnel, performing any tasks or responsibilities assigned to the Client or the Government of 

Puerto Rico and notifying McKinsey of any issues or concerns the Client may have relating to the Services. The Client 

is solely responsible for ensuring that the Government of Puerto Rico cooperates with responding to requests for purposes 

of the Services. The parties will meet at mutually agreed times to discuss the progress of the Services and to exchange 

feedback. During the course of the Services, priorities may shift or unexpected events may occur which may necessitate 

changes to the Services. In this event, the parties will jointly discuss the anticipated impact on the Services and agree on 

any appropriate adjustments, including to the scope of work, timeframe and budget. 

 2. COMPENSATION. The Client shall compensate McKinsey on a Firm Fixed Price basis in connection with the 

Services, as set forth in the Attachments. Any payments made by the Board to McKinsey hereunder are expressed net of 

any deductions or withholdings that may be applicable in respect of taxes, duties or levies and the Client will pay those 

amounts to McKinsey, in cleared funds. The parties agree that McKinsey is solely responsible for any applicable 

withholding and payment of taxes with respect to McKinsey Personnel as required by law. Neither party undertakes, 

pursuant to his Agreement or otherwise, to perform or discharge any liability or obligation of the other party, whether 

regulatory or contractual, or to assume any responsibility whatsoever for the conduct of the business or operations of the 

other party. Consistent with the public purpose of the Client’s mandate, this Agreement will be made publicly available 

subject to Section 5 below. McKinsey will invoice the Client for Deliverables in connection with the Services monthly 

or as otherwise set forth in the applicable Proposal. Except for Services provided under retainer, all invoices are to be 

paid in accordance with the court order setting procedures for interim compensation and reimbursement of professionals. 

 3. CONFIDENTIALITY. Subject to applicable public disclosure laws and the disclosure procedures established 

by Client that do not otherwise conflict with terms in this agreement, each Party agrees to keep confidential any 

confidential information furnished by either Party in connection with the Services (“Confidential Information"); 

provided, however, that the Client may disclose Confidential Information from McKinsey as necessary or desirable 

to carry out its statutory duties. The Client agrees to provide McKinsey prior notice of its intent to disclose 

Confidential Information from McKinsey. Without the Client’s explicit consent, McKinsey will disclose Confidential 

Information only to its employees, agents and contractors who have a need to know and are bound to keep it confidential 

and will use Confidential Information only for purposes of performing the Services. Confidential Information shall be 

all information other than information that is (i) or becomes publicly available other than as a result of a breach of this 

agreement, (ii) already known to the Receiving Party, (iii) independently acquired or developed by the Receiving Party 

without violating any of its obligations under this agreement, or (iv) is legally required to be disclosed. All documents 

supplied by the Receiving Party Client in connection with the services hereunder will, upon written request, be 

returned by the Receiving Party to the Disclosing Party or destroyed, provided that the Receiving Party may retain 

a copy for archival purposes. In performing the Services, McKinsey will use and rely primarily on the Confidential 

Information and on information available from public sources without having independently verified the same and does 

not assume responsibility for the accuracy or completeness of the Confidential Information or such other publicly 

available information and Section 5 herein. 

 4. INTELLECTUAL PROPERTY. Upon payment in full of McKinsey’s Fees associated with the relevant 

Services, the Client will own all reports, financial models and other deliverables prepared for and furnished to the Client 

by McKinsey in connection with the Services (the “Deliverables”), save that McKinsey retains ownership of all concepts, 

know-how, tools, frameworks, models, and industry perspectives developed or enhanced outside of or in connection with 

the Services (the “McKinsey Tools”), it being understood that none of the McKinsey Tools will contain the Client’s 

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Sensitivity: Confidential 

Confidential Information. To the extent the Deliverables include any McKinsey Tools, McKinsey hereby grants the Client 

a non-exclusive, non-transferable, non-sublicenseable, worldwide, royalty-free license to use and copy the McKinsey 

Tools solely as part of the Deliverables and subject to the limitations herein on disclosure of McKinsey materials and 

publicity. 

 5. DISCLOSURE OF McKINSEY MATERIALS; PUBLICITY. McKinsey’s work for the Client is confidential 

and for the Client’s internal use only; provided, however, the Client may disclose such work to the extent such disclosure 

is necessary or desirable to carrying out the Client’s statutory duties. The Client agrees that it will not disclose 

McKinsey’s name in relation to any disclosure of work hereunder without McKinsey’s consent. McKinsey will not 

disclose the Deliverables to any third parties (including any non-voting Board members) without the Client’s prior written 

permission. McKinsey further agrees not to use the Client’s name in any communication with any third party without the 

other party’s prior written permission, including in press releases or other public announcements. If the Client receives 

a public records request for Deliverables or other documents containing McKinsey information, the Client will allow 

McKinsey the ability to review the documents prior to disclosure to advise if the documents contain information subject 

to an exception or exemption to the relevant public records law. 

 6. SERVING COMPETITORS. It is McKinsey’s long-standing policy to serve competing clients and clients with 

potentially conflicting interests as well as counter-parties in merger, acquisition and alliance opportunities, and to do so 

without compromising McKinsey’s professional responsibility to maintain the confidentiality of client information. 

Consistent with such practice and McKinsey’s confidentiality obligations to its other clients, McKinsey is not able to 

advise or consult with the Client about McKinsey’s serving the Client’s competitors or other parties. To avoid situations 

of potential conflict, McKinsey will not, for a period of one year following an engagement for the Client, assign any 

consultant who receives Confidential Information in connection with such engagement to a competitively sensitive 

project, including a directly-conflicting engagement with the Government of Puerto Rico. Notwithstanding the 

foregoing, the Client understands and agrees that so long as McKinsey has appropriate procedures in place to mitigate 

any potential conflict, it may serve the Government of Puerto Rico on related matters. 

 7. INDEMNIFICATION. 

 (a) Deliverables produced hereunder are not intended as a substitute for financial, investment, legal, accounting or 

other professional advice, and McKinsey does not intend to supplant the Client or the Government of Puerto Rico’s 

management or other decision-making bodies. 

 (b) The Client and the Government of Puerto Rico remain solely responsible for its decisions, actions, use of the 

Deliverables and compliance with applicable laws, rules and regulations. McKinsey agrees to indemnify and hold the 

Client harmless from and against all loss, liability, damage, cost, or expense (including reasonable attorney fees) 

(“Losses”) to the extent those Losses are determined by a final, non-appealable order or arbitral award to have resulted 

from McKinsey’s gross negligence or willful misconduct in the performance of the Services. 

 (c) The Client agrees to indemnify and hold McKinsey harmless from any Losses (including the costs of McKinsey’s 

professional time) relating to the Services (including any Losses asserted by the Client, its agents or representatives, or 

third parties and any Losses sustained by McKinsey when participating in any legal, regulatory, or administrative 

proceeding relating to the Services), except to the extent those Losses are determined by a final, non-appealable order or 

arbitral award to have resulted from McKinsey’s gross negligence or willful misconduct in the performance of the 

Services. 

 (d) The Client further indemnifies McKinsey, including any member, officer or employee thereof including but not 

limited to the Revitalization Coordination role, in any instance where it is a party, or is threatened to be made a party, to 

any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, 

against judgments, fines, amounts paid in settlement and expenses (including attorneys’ fees) actually and reasonably 

incurred by him or her in connection with such action, suit or proceeding, unless it acted with bad faith or engaged in 

intentional misconduct and, with respect to any criminal action or proceeding, unless it knew or should have known the 

conduct was unlawful. The termination of any act, suit or proceeding by judgment, order, settlement, conviction, or upon 

a plea of nolo contender or its equivalent, shall not, of itself, create a presumption that McKinsey (or any of its members, 

officers or employees) did not satisfy these standards. 

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Sensitivity: Confidential 

Neither party will be liable for any lost profits or other indirect, consequential, incidental, punitive or special damages. 

In no event shall McKinsey’s liability to the Client in connection with the Services relating to an engagement for the 

Client exceed the amount paid to McKinsey by the Client in connection with such engagement. 

 8. AUTHORITY OF THE BOARD. The Client represents and warrants it has the authority to enter into this 

Agreement for the Services. In the event that it is determined that the Client did not have authority to authorize all or 

part of this agreement, McKinsey may make the sole determination as to whether to terminate the Agreement according 

to Section 10 herein, or continue with those parts of the Services for which the Client does have authority. The Client 

agrees to indemnify and hold McKinsey harmless from any Losses (including the costs of McKinsey’s professional time) 

resulting from a breach of this Section 8 and/or a misrepresentation by the Client of authority to act (including any Losses 

asserted by the Client, its agents or representatives, or third parties and any Losses sustained by McKinsey when 

participating in any legal, regulatory, or administrative proceeding relating to the Services). 

 9. CONFLICTS OF INTEREST. The Client agrees that performance of Services hereunder shall not conflict 

McKinsey from serving the Government of Puerto Rico or any stakeholders to the work, subject to the restrictions in 

Section 6 – “Serving Competitors.” 

 10. TERM AND TERMINATION. This agreement takes effect on the date the Services commenced and shall 

continue until terminated in accordance with its terms. Either party may terminate the Services at any time effective 

upon 30 days written notice to the other. In the event of any termination, the Client will pay McKinsey for the work 

completed up to the effective date of termination. 

 11. MISCELLANEOUS. This agreement and the Proposals constitute the entire agreement between the parties, and 

there are no prior or contemporaneous oral or written representations, understandings or agreements relating to this 

subject matter that are not fully expressed herein or therein. This agreement and the Proposals shall be governed by and 

construed in accordance with the laws of the State of New York without regard to conflicts of law principles and shall 

inure to the benefit of and be binding on the successors and assigns of the Client and McKinsey. The following Sections 

shall survive the completion or any termination of the Services: 3 (Confidentiality), 4 (Intellectual Property), 5 

(Disclosure of McKinsey Materials; Publicity), 6 (Serving Competitors), 7 (Indemnification), 8 (Term and Termination) 

and 9 (Miscellaneous) and any other provision which by law or by its nature should survive. Neither party may assign 

its rights or obligations under this agreement to any person or entity without the written consent of the other party, not to 

be unreasonably withheld, provided, however, that either party may assign its rights and obligations under this agreement 

to its affiliates upon reasonable written notice to the other party but without the written consent of the other party. 

Assignment shall not relieve either party of its obligations hereunder. McKinsey is an independent contractor and not 

the Client’s agent or fiduciary. Notwithstanding any course of dealings of the parties at any time or any statement to the 

contrary contained therein, no purchase order, invoice or other similar document issued by a party shall be construed to 

modify the terms of this agreement. Rights and remedies provided in this agreement are cumulative and not exclusive 

of any right or remedy provided at law or in equity. 

The Financial Oversight and Management Board for Puerto Rico McKinsey & Company, Inc., Washington D.C. 

(Client)

 

_________________________________ _________________________________ 

Name: Name: Tyler Duvall 

Title: Title: Partner 

Date: Date: September 8, 2017 

 

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Sensitivity: Confidential 

ATTACHMENT 1 

Scope of Work 

For 

Commonwealth Title III Support 

Services: 

In regards to support for the Commonwealth Title III proceedings to the Board to include: 

Activities: 

 Participation in and coordination of cross advisor meetings (Board, Commonwealth and/or 

Stakeholders) regarding Title III related matters 

 Preparation of materials necessary for supporting Fiscal Plan litigation, which could include: 

 Assemble fact base regarding process for creation, stress testing and certification of the fiscal 

plan 

 Assemble fact base regarding additional analyses created for the FOMB with respect to 

evaluating/stress testing the FY18 fiscal plan 

 Collect and summarize key input sources and supporting analysis for key fiscal plan assumptions 

 Assemble fact base regarding process and supporting analysis used to identify and evaluate key 

measures proposed and finally included in the fiscal plan 

 Prepare and/or evaluate alternative fiscal plan scenario analyses in support of requested 

alternative contexts 

 Prepare analyses in support of litigation activities 

 As needed, ad-hoc analyses and/or responses to questions regarding litigation or potential litigation 

relating to the Fiscal Plan or other Commonwealth Title III matters 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverable: 

 Monthly report regarding liquidity performance and strategic choices on liquidity related to Title III 

proceedings and/or ad hoc analysis performed within that month.

Support Structure and Cost: 

 The cost for this work will be $740,000 per month and will continue so long as the 

Commonwealth Title III process continues or the Board no longer believes the support is 

necessary. 

 If additional deliverables are required by McKinsey beyond this core support this contract 

will be amended to reflect any required support.

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Sensitivity: Confidential 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

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Sensitivity: Confidential 

ATTACHMENT 2 

Scope of Work 

for 

Title III Support for PREPA 

Services: 

In regards to work specifically supporting the Title III proceedings for the Board with relation to 

PREPA, McKinsey will support the Board in the following ways: 

1. Coordinate and provide analysis related to development of the transformation plan and plan 

of arrangement for PREPA

Activities: 

The core activities include working directly with the Board, the Executive Director and Board Staff 

in the following areas (as well as ad hoc and as needed support): 

 Establishment of the PREPA working group for Title III, including working group protocol, 

governance, cadence, targets and coordination 

 Lead PREPA working group for Title III, including leading meetings, developing core 

materials, workplans, agendas and coordination with PREPA, AAFAF and its experts and 

advisors 

 Develop transformation plan for PREPA for Title III which includes but is not limited to: 

 - Operational stabilization plans focused on near and immediate term actions to maintain 

sustainable operations and launch capex programs with specific implementation plans, 

resourcing and costing supporting their delivery 

 - Debt restructuring terms and plans, agreed with creditors to the extent possible 

 - Detailed privatization/corporatization plans supported by financial models and market 

engagement 

 - Detailed action plans to implement all measures identified in the Fiscal Plans with 

additional measures to achieve Board targets 

 - Governance and management plans that will enable delivery of actions 

 - Stakeholder management plans and demonstrable success in engaging key stakeholders 

 such as regulators 

 - Macro-resource planning when required (e.g. updated IRP for PREPA) 

 - Clear assessments of economic and social impacts on the people of Puerto Rico 

 - Clear timelines for delivery of the plan 

 Coordinate development of and approval by the Board of other submissions related to the 

Title III proceedings, including Plans of Arrangements, financial disclosure, implementation 

plans, contract assumption and rejection 

 Work with Board management and Board PREPA subcommittee to provide updates and take 

guidance on PREPA transformation and Title III 

 Monitor implementation of all aspects of the PREPA transformation plans and Title III plans 

 Escalating deviations from plans and defining solutions for compliance 

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Sensitivity: Confidential 

 Conduct limited market engagement as necessary to identify potential privatization options 

for PREPA 

 Lead development of an integrated resource plan for PREPA to support the Transformation 

Plan in coordination with PREC and PREPA 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverables: 

A monthly report describing progress against transformation objectives, as well as specific 

supporting analyses, including: 

 

 Detailed action plans, including e.g. structural solutions, governance, likely economic 

impacts and operational stabilization 

 Synopsis of market perspectives related to different potential options 

 Integrated resource plan 

Support Structure and Cost: 

 The cost for this work will be $740,000 per month and will continue so long as the Title III 

process continues or the Board no longer believes the support is necessary. 

 If additional deliverables are required by McKinsey beyond this core support this contract 

will be amended to reflect any required support. 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

 

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Sensitivity: Confidential 

ATTACHMENT 2 

Scope of Work 

for 

Title III Support for HTA 

Services: 

In regards to work specifically supporting the Title III proceedings for the Board with relation to HTA, 

McKinsey will support the Board in the following ways: 

Coordinate and provide analysis related to development of the transformation plan and plan of 

arrangement for HTA

Activities: 

The core activities include working directly with the Board, the Executive Director and Board Staff 

in the following areas (as well as ad hoc and as needed support): 

 Establishment of the HTA working group for Title III, including working group protocol, 

governance, cadence, targets and coordination 

 Lead HTA working group for Title III, including leading meetings, developing core 

materials, workplans, agendas and coordination with HTA, AAFAF and its experts and 

advisors 

 Develop transformation plan for HTA for Title III which includes but is not limited to: 

 - Operational stabilization plans focused on near and immediate term actions to maintain 

sustainable operations and launch capex programs with specific implementation plans, 

resourcing and costing supporting their delivery 

 - Debt restructuring terms and plans, agreed with creditors to the extent possible 

 - Detailed privatization/corporatization plans supported by financial models and market 

engagement 

 - Action plans to implement all measures identified in the Fiscal Plans with additional 

measures to achieve Board targets 

 - Governance and management plans that will enable delivery of actions 

 - Stakeholder management plans and demonstrable success in engaging key stakeholders 

 such as regulators 

 - Macro-resource planning when required 

 - Clear assessments of economic and social impacts on the people of Puerto Rico 

 - Clear timelines for delivery of the plan 

 Coordinate development of and approval by the Board of other submissions related to the 

Title III proceedings, including Plans of Arrangements, financial disclosure, implementation 

plans, contract assumption and rejection 

 Work with Board management and Board HTA subcommittee to provide updates and take 

guidance on HTA transformation and Title III 

 Monitor implementation of all aspects of the HTA transformation plans and Title III plans 

 Escalating deviations from plans and defining solutions for compliance 

 Support litigation related to the HTA proceedings, which has commenced 

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Sensitivity: Confidential 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverables: 

A monthly report describing progress against transformation objectives, as well as specific 

supporting analyses, including: 

 

 Detailed action plans, including e.g. structural solutions, governance, likely economic 

impacts and operational stabilization 

 Synopsis of market perspectives related to different potential options 

 Integrated resource plan 

Support Structure and Cost: 

 The cost for this work will be $720,000 per month and will continue so long as the HTA 

Title III process continues or the Board no longer believes the support is necessary. 

 If additional deliverables are required by McKinsey beyond this core support, this contract 

will be amended to reflect any required support. 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

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EXHIBIT B

Certification of McKinsey Washington Partner Tyler Duvall

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9

UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

CERTIFICATION OF TYLER DUVALL

I, Tyler Duvall, hereby declare the following under penalty of perjury:

1. I am one of the McKinsey Washington Partners providing consulting services related to 

the above-captioned Title III case;

2. I have personally performed many of the professional services rendered by McKinsey 

Washington as strategic consultant to the Debtors and am familiar with all other work performed 

on behalf of the Debtors by the Partners, Associates, and other persons in the Firm;

3. The facts set forth in the foregoing Consolidated Fourth Monthly Fee Statement:

Commonwealth Title III Support are true and correct to the best of my knowledge, information, 

and belief;

4. I have reviewed the Interim Compensation Procedures and believe that McKinsey

Washington’s Consolidated Fourth Monthly Fee Statement: Commonwealth Title III Support

complies therewith; and

5. In accordance with Section 11.a. of the Interim Compensation Procedures, I hereby certify 

as follows:

i. No public servant of the Department of Treasury is a party to or has any interest in 

the gains or benefits derived from the Consulting Agreement (the contract) that is 

the basis of this invoice;

ii. The only consideration for providing services under the Consulting Agreement (the 

contract) is the payment agreed upon with the authorized representatives of the 

Debtor;

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10

iii. The amounts of these invoice are reasonable; 

iv. The services were rendered and the corresponding payment has not been made; and 

v. To the best of my knowledge, McKinsey Washington does not have any debts owed 

to the Government of Puerto Rico or its instrumentalities.

Pursuant to 28 U.S.C. §1746, I declare under penalty of perjury that the foregoing is true and 

correct.

Dated: June 27, 2018

Washington, DC 

 s/Tyler Duvall 

Tyler Duvall

Partner

McKinsey & Company, Inc. Washington DC

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EXHIBIT C

Certification of FOMB Executive Director Natalie Jaresko

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EXHIBIT D

Title III Support for Commonwealth

February 2018

Summary of Work

The scope of services and deliverables related to Commonwealth Title III during February 2018 

involved refining the FOMB’s perspective across all aspects of the fiscal plan, including the 

baseline, fiscal measures, and structural reforms. In addition, it involved preparation of the analysis 

and content for major Board strategy sessions, as well as sessions between the Government and 

the Board. The team drove towards finalization of FOMB baseline and measures models, refined 

structural reform initiatives to drive economic growth, and analyzed the Government’s fiscal plan 

for points of divergence. The core activities included working directly with the Board, the 

Executive Director, and Board Staff on the below areas (and providing ad hoc support as needed): 

McKinsey Washington’s Commonwealth Title III Team Detailed Activities by Deliverable:

 Facilitated major Board strategy sessions (including strategy sessions conducted on Feb 

2nd, Feb 15th, and March 1st and 2nd) to share key analyses, tee up strategic decisions, and 

help prepare Board for government / Governor interactions

 Led diligence of Government Fiscal Plan submissions, including analysis of hundreds of 

discrete data sources and inputs, comparing with FOMB perspective baseline, measures, 

and structural reform scoring; scored Government Fiscal Plan and worked with FOMB staff 

to identify key recommendations and requirements 

 Crafted content for Board to provide to Government to incorporate into Fiscal Plan 

(including pensions, labor, tax law initiatives, etc.)

 Created a new model structure for final Fiscal Plan model submission, and led government 

through new structure to help translate government model into final format 

 Provided overview of core questions to answer in order to develop a successful county 

model (including, review of potential regionalization / consolidation options, sample county 

structures across mainland, etc.), and investigated best practices in county models

 Refined scoring of Board structural and fiscal reforms (e.g., labor reform impact on growth; 

potential impact of corrections rightsizing) and identified potential implementation 

mechanisms (including of NAP work requirement)

 Updated, maintained, and conducted ongoing quality assurance on hundreds of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

 Refined key estimates that influence the baseline projection of economic activity in Puerto 

Rico (e.g., refined federal disaster spend, revenue collections, Medicaid PMPM estimates, 

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etc.) – including by determining implications of Senate Supplemental Bill (Bipartisan 

Budget Act)—including on Medicaid, disaster funding, Puerto Rico’s cost share, etc. 

 Conducted multiple sessions with Government advisors to pressure test assumptions, refine 

data, discuss core ideas underpinning the fiscal plan 

 Provided analysis for Board members as needed (including deep dive on FY18 budget and 

baseline, implication of actual revenue collections for FY18 revenue projections, etc.) 

McKinsey Washington’s Commonwealth Title III Team Detail and Contributions

 Bertil Chappuis (Senior Partner)

– Provided overall guidance across all McKinsey efforts and managed overall relationships 

with Board, Board staff and other advisors to ensure efficient and effective execution of 

work

– Participated in weekly Executive Board and Subcommitee calls to review progress and 

advise on key decisions

– Participated in multiple individual discussions with outside stakeholders in Puerto Rico 

to understand and inform Board strategy and approach (eg NGOs, business leaders, 

community leaders

– Reviewed and provided feedback on all interim and final documents for Board working 

sessions with Governor in NY on Feb 2nd, and creditor mediation on Feb 3rd

– Provided guidance on agenda for Feb 2nd and 3rd sessions and attended all meetings

 Kevin Carmody (Senior Partner)

– Participated in problem solving sessions with the team regarding the fiscal plan

– Reviewed presentation and supporting analyses for meetings with the Board

– Worked with McKinsey leadership team to set specific goals and priorities related to the 

fiscal plan work and supporting details

– Reviewed short-term/intermediate term financial projections to assess the short-term 

funding requirements for Puerto Rico

– Coordinated and participated in cross advisor meetings (Board and Commonwealth) 

regarding Title III and Commonwealth Fiscal Plan/liquidity requirement matters

– Provided overall quality control on team content and stakeholder management with 

Board, FOMB staff and co-advisors

 Thomas Dohrmann (Senior Partner)

– Participated in working sessions with team regarding the government’s fiscal plan 

assumptions 

– Provided input on Board materials regarding macroeconomic projections and revenue 

and expenditure measures

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– Provided expertise on global comparable disaster events and impacts 

 Tyler Duvall (Partner)

– Overall day-to-day McKinsey lead for all Title III efforts. 

– Led fiscal plan work with respect to measures and integration of structural reforms into 

fiscal plan. 

– Participated in twice a week problem solving sessions with fiscal plan team

– Helped lead Board strategy and preparation working sessions in support of Board 

discussions with the Governor

– Led McKinsey team participation in advisor/Board/Governor fiscal plan meetings in 

NYC

– Provide specific content leadership related to areas of expertise including: infrastructure 

delivery and government operational efficiencies; 

– Briefed Executive Director of FOMB regularly on all material topics related to fiscal 

plan development

 Jonathan Davis (Partner) 

– Directed work of overall team and led quality control of all Board materials and 

documentation 

– Led content creation on fiscal baseline, fiscal and structural measures, providing overall 

guidance, problem solving support, and expertise

– Provided in-depth review over multiple iterations of draft fiscal plans for overall 

consistency, content quality 

– Participated in key Board and Executive Director meetings to provide expertise and 

thought partnership 

– Provided expertise on a variety of topics, including federal tax reform, macroeconomic 

drivers, global comparable disaster events and impacts, core principles and best practices 

for tax reform, and revenue measures

 Jennifer Rost (Partner)

– Provided expertise on and led content creation on all healthcare analyses and outputs, 

including baseline expenditure projections (including population projections, PMPM 

growth rates), potential measures, new assumptions to incorporate, etc. 

 Ojas Shah (Partner)

– Led overall work with regards to fiscal plan model development, analysis and refinement

– Participated in Board strategy and preparation working sessions in support of Board 

discussions with the Governor

– Attended advisor/Board/Governor fiscal plan meetings in NYC

– Prepare for and attended creditor mediation session regarding draft fiscal plan on 

February 3, 2018.

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– Led analysis and engagement with government advisors regarding the creation of a 

professional fee forecast 

– Attended and participated in several working sessions with government advisors 

regarding fiscal plan expense baseline and model structure

– Oversaw the preparation of analysis regarding expense baseline in response to Board 

diligence questions

– Participated in FOMB and Executive Director calls to provide updates regarding Title III 

and Commonwealth Fiscal Plan related matters and analyses

 Todd Wintner (Associate Partner)

– Directed work of fiscal measures team and led quality control of all Board materials /

documentation related to fiscal measures

– Provided expertise to develop Board perspective on expenditures baseline, including key 

changes in departmental costs (cap ex, op ex), personnel costs (e.g., payroll, pensions), 

programmatic costs (e.g., Medicaid), and other key model line items and inputs 

– Led FOMB perspective Fiscal Plan measures modeling and comparison to Government 

submissions, including structural reforms (e.g., education)

– Participated in joint Government-FOMB agency right-sizing working group to reach 

alignment on specific agency targets and measures for inclusion in fiscal plan

– Helped lead FOMB perspective on healthcare and education measures refinement, 

including key meetings with the AAFAF, Puerto Rico Department of Education (PRDE) 

and ASES

– Helped lead content creation on key documentation and participated in key Board and 

Executive Director interactions on measure development and expenditure baseline

 Sara O’Rourke (Engagement Manager)

– Managed working team across all topic areas, and drove progress on the ground (scoping 

work, determining workplan, scheduling key touchpoints, pulling in expertise where 

needed)

– Reviewed and conducted quality control for key documentation for Board / Executive 

Director interactions, as well as for external stakeholders (including public board 

meetings, listening sessions, creditor sessions)

– Served as primary contact for all McKinsey Title III teams for Board, Executive Director 

& staff; as well as point of contact for baseline team in all external stakeholder 

interactions

– Prepared presentations for and presented key content for Executive Director and Board 

– Incorporated perspectives across teams on core measures, structural reforms with 

implications on HTA, PREPA, PRASA, etc.

– Managed relationships and worked closely with Board and Government economists to 

finalize estimations

– Facilitated Board sessions 

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 Justin Reed (Senior Associate)

– Organized and participated in cross advisor calls and meetings to coordinate fiscal plan 

revision efforts with Government advisors

– Participated in discussions with government officials regarding outstanding agency 

paygo balances owed to Commonwealth and monthly paygo reporting

– Drove initial development and review of bridge from FY18 budget to revised fiscal plan 

expense baseline 

– Drove development of revised fiscal plan model structure and led coordination 

calls/meetings with Government advisors to align on final structure 

– Continued collaborated with Government advisors to align on methodology used to 

projected baseline revenues 

– Reviewed and refined analysis highlighting agencies covered under the Commonwealth 

fiscal plan

– Drove analysis projecting Commonwealth maintenance capex expense and collaborated 

with government advisors to understand Commonwealth capex allocation to UPR and 

HTA

– Reviewed and refined analysis projecting FOMB and Government professional fees 

– Participated in cross advisor calls and meetings to coordinate fiscal plan revision efforts 

with Government advisors

 Justin Collins (Associate)

– Drove continued review and response to creditor mediation questions 

– Initial development of analysis highlighting outstanding paygo amounts due to the 

commonwealth from various agencies and instrumentalities 

– Developed initial draft analysis outlining key changes from the fiscal plan certified 

March 2017

– Initial development of bridge from FY18 budget to revised fiscal plan expense baseline 

– Developed analysis bridging FY18 budget to IFCU forecasts 

 Dean Udom (Associate)

– Responsible for analysis of fiscal plan expenditures baseline, including major impacts to 

payroll, cap ex, op ex, and Medicaid expenditures 

– Integrated initial budget bridge analysis into master fiscal plan model

– Developed updated fiscal plan model structure presenting revenues and expenses on a

gross basis and highlighting key sources of federal funding 

– Developed detailed variance analysis highlighting differences between the draft 

government and FOMB perspectives 

– Owned master fiscal plan model, updating key assumptions and methodologies based on 

most recent information and analyses 

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– Managed integration of measures model into master fiscal plan model including 

coordination with measures team, merging of models, and reconciliation of final output 

 Peter Bailinson (Analyst)

– Drove analysis on fiscal measures related to pensions, subsidies, government rightsizing 

(including corrections, police, procurement, all other agencies), and revenues – and 

crafted core content for Board’s perspective

– Developed in-depth analysis on potential impact of county proposal, as well as core 

questions to answer to successfully build out county model 

– Provided scenario analysis of various agency efficiencies targets (including across 

education, corrections, etc.)

– Owned overall measures model and managed integration between measures and baseline 

models on core overlapping areas

– Drove analysis to develop Fiscal Plan materials related to corporate tax reform and 

subsidy principles

 Adam Gerard (Analyst)

– Led research and thinking on major revenue and expenditure assumptions (including, 

Act 154, corporate / individual / SUT revenues, Independently Forecasted Component 

Units, etc.)

– Helped lead problem solving with economists and demographer to refine 

macroeconomic model and projections. Including by analyzing Senate Supplemental Bill 

and HUD CDBG proposals to understand impact on macro 

– Led sizing of structural reforms and impact on macroeconomic trendline (including

impact of revenue neutral tax reform)

– Drafted core content on structural reforms, baseline projections, and macroeconomic 

trendline for Board fiscal plan perspective. 

 Avery Rasmussen (Analyst)

– Responsible for ongoing refinement of Medicaid baseline as new data became available 

to finalize FOMB perspective and led diligence of Government Fiscal Plan Medicaid 

baseline submissions

– Led analysis of interpretation of Medicaid federal funds – timing, eligibility, and overall 

impact on surplus 

– Led analysis and finalized perspective on healthcare and education measures

– Led structural reforms analysis, working with experts and clients on developing 

initiatives, metrics, cost analysis, and working with economists on growth impact

– Co-owned measures model to develop FOMB Fiscal Plan perspective of Medicaid and 

Education measures, refining as new data became available and leading diligence of 

Government submissions

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March 2018

Summary of Work

The scope of services and deliverables related to Commonwealth Title III during March 2018 

involved refining the FOMB’s perspective across all aspects of the fiscal plan, including the 

baseline, fiscal measures, and structural reforms. In addition, it involved participation in key 

Government / Board Working Groups to drive core outputs for the fiscal plan (including labor 

reform, tax reform, agency efficiencies). The core activities included working directly with the 

Board, the Executive Director, and Board Staff in the below areas (and providing ad hoc support 

as needed): 

McKinsey’s Commonwealth Title III Team Detailed Activities by Deliverable:

 Provided hundreds of pages of detailed edits / redline on Government March 

Commonwealth Fiscal Plan submission in order to prepare for approach to certification, 

including drafting core sections with FOMB perspectives 

 Drafted overall framing / executive summary for the Fiscal Plan 

 Participated in and helped prepare for key Working Groups to refine tax reform, agency 

efficiencies, and labor reform proposals for final fiscal plan, including preparing content, 

engaging with government collaborators, and codifying outputs 

 Facilitated major Board strategy sessions to share key analyses, tee up strategic decisions, 

and help prepare Board for government / Governor interactions

 Led diligence of Government Fiscal Plan submissions, comparing with FOMB perspective 

baseline, measures, and structural reform scoring; scored Government Fiscal Plan and 

worked with FOMB staff to identify key recommendations and requirements 

 Updated, maintained, and conducted ongoing quality assurance on hundreds of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

 Conducted multiple sessions with Government advisors to finalize assumptions, refine data, 

discuss core ideas underpinning the fiscal plan, and finalized baseline projection of 

economic activity in Puerto Rico (including refined federal disaster spend, revenue 

collections, Medicaid PMPM estimates, etc.) 

 Crafted long-term projections of Fiscal Plan in collaboration with other FOMB advisors, 

including major assumptions related to inputs for baseline, measures, structural reforms

 Provided ad hoc analysis for Board members as needed (including deep dive on FY18 

budget and baseline, implication of actual revenue collections for FY18 revenue 

projections, etc.) 

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McKinsey’s Commonwealth Title III Team Detail and Contributions

 Bertil Chappuis (Senior Partner)

– Provided overall guidance across all McKinsey efforts and managed overall relationships 

with Board, Board staff and other advisors to ensure efficient and effective execution of 

work

– Participated in weekly Executive Board and Subcommitee calls to review progress and 

advise on key decisions

– Reviewed and provided feedback on all interim and final documents, including for 

Board session on March 25

– Provided guidance on agenda for March 25th and attend meeting

 Thomas Dohrmann (Senior Partner)

– Participated in working sessions with team regarding the evaluation of government’s 

draft fiscal plan assumptions

– Provided input on Board materials regarding macroeconomic projections and revenue 

and expenditure measures

– Participated in select Board and FOMB sessions regarding fiscal plan development and 

assumptions

 Kevin Carmody (Senior Partner)

– Reviewed materials in advance of stakeholder listening session on December 4

– Participated in team problem solving sessions to discuss current workstreams and 

content created for fiscal plan

– Supported content creation on fiscal plan revision process

– Provided quality control on team content for discussions with Board, FOMB staff and 

co-advisors

 Tyler Duvall (Partner)

– Overall day-to-day McKinsey lead for all Title III efforts. 

– Led fiscal plan work with respect to measures and integration of structural reforms into 

fiscal plan. 

– Participated in twice a week problem solving sessions with fiscal plan team

– Helped lead Board strategy and preparation working sessions in support of Board 

discussions with the Governor

– Led McKinsey team participation in advisor/Board/Governor fiscal plan meetings 

– Provide specific content leadership related to areas of expertise including: infrastructure 

delivery and government operational efficiencies; 

– Briefed Executive Director of FOMB regularly on all material topics related to fiscal 

plan development

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 Jonathan Davis (Partner)

– Directed work of overall team and led quality control of all Board materials /

documentation 

– Key participant in Commonwealth / FOMB tax working group, including multiple 

working sessions with Hacienda and its advisors, analysis of proposals, briefings of 

Board members, and documentation of outcomes

– Conducted research on actual revenue trends, including internal analysis as well as 

external interviews

– Led content creation on fiscal baseline and revenue related structural reforms and 

measures, providing overall guidance, problem solving support, and expertise

– Provided expertise on a variety of topics, including federal tax reform, macroeconomic 

drivers, global comparable disaster events and impacts, core principles and best practices 

for tax reform, and revenue measures

 Ojas Shah (Partner)

– Led overall work with regards to fiscal plan model development, analysis and refinement

– Attended additional advisor/Board/Governor fiscal plan meeting in NYC

– Participated in discussions with FOMB team to refine expense baseline forecast

– Participate in discussions with other Board advisors regarding development of and 

assumptions related to the long-term forecast

– Prepared for and participated in Board meetings to review and comment on draft fiscal 

submissions from the government

– Led engagement with government advisors regarding refinement of professional fee 

forecast 

– Participated in FOMB and Executive Director calls to provide updates regarding Title III 

and Commonwealth Fiscal Plan related matters and analyses

 Todd Wintner (Associate Partner)

– Directed work of fiscal measures team and led quality control of all Board materials /

documentation related to fiscal measures and expenditure baseline, including refinement 

of non-disaster related federal funding assumptions (e.g., Medicaid reimbursement)

– Led FOMB perspective on select Fiscal Plan measures and structural reforms (e.g., 

healthcare, education) modeling and comparison to Government submissions

– Participated in joint Government-FOMB agency right-sizing working group to reach 

alignment on specific agency targets and measures for inclusion in fiscal plan

– Helped lead content creation on key documentation and participated in key Board and 

Executive Director interactions

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– Provided integration across UPR and CW fiscal plans 

 Jennifer Rost (Associate Partner)

– Provided expertise on and led content creation on all healthcare analyses and outputs, 

including baseline expenditure projections (including population projections, PMPM

growth rates), potential measures, new assumptions to incorporate, and federal funding 

assumptions 

 Sara O’Rourke (Engagement Manager)

– Managed working team across all topic areas, and drove progress on the ground (scoping 

work, determining workplan, scheduling key touchpoints, pulling in expertise where 

needed)

– Reviewed and conducted quality control for key documentation for Board / Executive 

Director interactions, as well as for external stakeholders (including public board 

meetings, listening sessions, creditor sessions)

– Served as primary contact for all McKinsey Washington Title III teams for Board, 

Executive Director & staff; as well as point of contact for baseline team in all external 

stakeholder interactions

– Prepared presentations for and presented key content for Executive Director and Board 

– Incorporated perspectives across teams on core measures, structural reforms with 

implications on HTA, PREPA, PRASA, etc.

– Managed relationships and worked closely with Board and Government economists to 

finalize estimations

– Facilitated Board sessions 

 Justin Reed (Senior Associate)

– Coordinated and participated in cross advisor calls and meetings to coordinate fiscal plan 

revision efforts with Government advisors

– Reviewed and revised draft analysis mapping FY17 budget to FY18 budget and noting 

key differences

– Reviewed and revised agency right sizing expense baseline 

– Drove collaboration to promote assumption alignment across PREPA, HTA, and 

Commonwealth fiscal plans

– Reviewed analysis detailing Commonwealth UPR appropriation 

– Drove development of comprehensive analysis comparing FY17 and 18 budgets to the 

fiscal plan certified in March 2017 and the revised fiscal plan 

– Coordinated board subcommittee meeting reviewing expense baseline assumptions 

– Reviewed analyses comparing assumptions included in the government and FOMB draft 

fiscal plan perspectives 

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 Justin Collins (Associate) 

– Initial development of multiple analyses used to validate baseline assumptions 

– Development of updated bridge from FY18 baseline to FP2.0 

– Participated in continued development of fiscal plan expense baseline 

– Further development of analysis quantifying outstanding paygo obligation owed to the 

Commonwealth by agencies and instrumentalities 

– Further review and analysis regarding entities covered in the revised fiscal plan

 Dean Udom (Associate) 

– Development of analysis comparing FY17 and FY18 budget

– Development of agency rightsizing expense baseline

– Development of reconciliation from agency rightsizing expense baseline to FY18 budget

– Implemented structural changes to consolidated fiscal plan model

– Processed general fiscal plan maintenance updates 

– Participated in cross advisor calls to further alignment on baseline revenue projections

 Peter Bailinson (Analyst)

– Core driver of work related to agency efficiencies working group, integrating work from 

across team 

– Drove analysis on fiscal measures related to pensions, subsidies, government rightsizing 

(including corrections, police, procurement, all other agencies), and revenues – and 

crafted core content for Board’s perspective

– Provided scenario analysis of various agency efficiencies targets (including across 

education, corrections, etc.)

– Owned overall measures model and managed integration between measures and baseline 

models on core overlapping areas

 Avery Rasmussen (Analyst)

– Helped drive bottom up analysis of Department of Health and Education, as well as top 

down agency efficiencies analysis on core groupings (including Social Welfare, 

Executive Office, etc.)

– Responsible for ongoing refinement of Medicaid baseline as new data became available 

to finalize FOMB perspective and led diligence of Government Fiscal Plan Medicaid 

baseline submissions

– Helped drive top down agency efficiencies working group analysis on agency groupings

– Finalized interpretation of Medicaid federal funds – timing, eligibility, and overall 

impact on surplus 

– Finalized structural reforms analysis, working with experts and clients on developing 

initiatives, metrics, cost analysis, and working with economists on growth impact

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 Adam Gerard (Analyst)

– Finalized FOMB perspective on major revenue and expenditure assumptions (including 

Act 154, corporate / individual / SUT revenues, Independently Forecasted Component 

Units, etc.)

– Helped drive top down agency efficiencies working group analysis on agency groupings 

– Supported tax reform working group through key analysis of pay fors / incentives / 

subsidies 

– Helped lead problem solving with economists and demographer to refine 

macroeconomic model and projections (including disaster spend, pass-through, roll out) 

– Drafted core content on structural reforms, baseline projections, and macroeconomic 

trendline for Board fiscal plan perspective. 

April 2018

Summary of Work

The scope of services and deliverables related to Commonwealth Title III during April 2018 

involved finalizing the Commonwealth Fiscal Plan and financial model in order to support 

certification. The core activities included working directly with the Board, the Executive Director, 

and Board Staff in the below areas (and providing ad hoc support as needed): 

McKinsey’s Commonwealth Title III Team Detailed Activities by Deliverable

 Initiated development of Fiscal Plan word document, with hundreds of pages outlining the 

proposed plan, demonstrating savings across timeline of plan, and providing supporting 

documentation and assumptions; incorporated edits of all Board members and FOMB 

advisors to finalize draft

 Facilitated major Board strategy sessions on April 6th,13th, and 19th to share key analyses, 

tee up strategic decisions, and finalize the Fiscal Plan 

 Finalized financial model to support Fiscal Plan based on final assumptions / inputs and 

projections

 Provided long-term macroeconomic, baseline, measures and structural reform assumptions 

for long-term financial projections and in support of the Debt Sustainability Analysis 

 Supported Board through analysis of potential reinvestment scenarios to enable structural 

reforms 

 Developed Board presentations, talking points, fact pacts, and “FAQ” documents on the 

Fiscal Plan in order to support certification and explanation of plan to various stakeholder 

groups

 Translated Fiscal Plan and supporting exhibits into Spanish 

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 Updated, maintained, and conducted ongoing quality assurance on hundreds of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

 Provided ad hoc analysis for Board members as needed (including a comparison of Fiscal 

Plan to March 2017 Certified fiscal plan, etc.)

 Documented all assumptions in preparation for mediation and creditor engagement 

 Began translation of Fiscal Plan into agency line item spend to enable creation of budget 

McKinsey’s Commonwealth Title III Team Detail and Contributions

 Bertil Chappuis (Senior Partner)

– Provided overall guidance across all McKinsey efforts and managed overall relationships 

with Board, Board staff and other advisors to ensure efficient and effective execution of 

work

– Participated in weekly Executive Board and Subcommitee calls to review progress and 

advise on key decisions

– Reviewed and provided feedback on all interim and final documents, including for 

Board sessions on April 19th and 20th and attended all sessions

– Provided guidance on agenda for April 19th and 20th Board meetings and attend

Sessions

 Thomas Dorman (Senior Partner)

– Participated in working sessions with team regarding evaluation of development of 

Board fiscal plan

– Provided input on Board materials regarding macroeconomic projections and revenue 

and expenditure measures

– Participated in select Board and FOMB sessions leading up to certification of the fiscal 

plan

 Kevin Carmody (Senior Partner)

– Reviewed analyses related to model structure and baseline assumptions included in draft 

government submission of revised fiscal plan

– Participated in problem solving sessions with team regarding the fiscal plan assumptions

– Reviewed variance analysis highlighting outstanding key areas of difference between 

government draft fiscal plan and FOMB perspective 

– Attended and participated in several FOMB strategy sessions in support of on-going 

discussions between the FOMB and the government

– Provided quality control on team content

 Tyler Duvall (Partner)

– Overall day-to-day McKinsey lead for all Title III efforts. 

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– Led fiscal plan work with respect to measures and integration of structural reforms into 

fiscal plan. 

– Participated in twice a week problem solving sessions with fiscal plan team

– Helped lead Board strategy and preparation working sessions in support of Board 

discussions with the Governor

– Led McKinsey team participation in advisor/Board/Governor fiscal plan meetings 

– Provide specific content leadership related to areas of expertise including: infrastructure 

delivery and government operational efficiencies; 

– Briefed Executive Director of FOMB regularly on all material topics related to fiscal 

plan development

 Jonathan Davis (Partner) 

– Directed work of overall team and led quality control of all Board materials /

documentation 

– Conducted numerous reviews of draft fiscal plans, in whole and in part, for consistency 

and quality leading up to fiscal plan certification

– Supported FOMB staff and members on core fiscal topics leading up to public meeting

– Led content creation on fiscal baseline and revenue related structural reforms and 

measures, providing overall guidance, problem solving support, and expertise

– Provided expertise on a variety of topics, including federal tax reform, macroeconomic 

drivers, global comparable disaster events and impacts, core principles and best practices 

for tax reform, and revenue measures

 Ojas Shah (Partner)

– Led overall work with regards to fiscal plan model development, analysis and refinement

– Draft and review and comment on drafts of various sections of Board fiscal plan

– Review and comment on latest draft Gov’t fiscal plan

– Participate in strategy and preparation sessions with Board and FOMB advisors to

finalize fiscal plan and prepare for public hearing on April 19/20.

– Attend public certification hearing on April 19/20 in San Juan, PR.

– Review and comment on latest draft fiscal plan model prepare for certification

– Participated in FOMB and Executive Director calls to provide updates regarding Title III 

and Commonwealth Fiscal Plan related matters and analyses

 Todd Wintner (Associate Partner)

– Directed work of fiscal measures team and led quality control of all Board materials /

documentation related to fiscal measures

– Led FOMB perspective on select Fiscal Plan measures and structural reforms (e.g., 

healthcare, education) modeling and comparison to Government submissions

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– Helped lead content creation on key documentation and participated in key Board and 

Executive Director interactions, including preparation for Board strategy session on 4/19

– Ensured continuity and integration across UPR and CW fiscal plans, particularly with 

regard to CW appropriations, in lead up to certification of UPR fiscal plan in April

 Sara O’Rourke (Engagement Manager)

– Managed working team across all topic areas, and drove progress on the ground (scoping 

work, determining workplan, scheduling key touchpoints, pulling in expertise where 

needed)

– Reviewed and conducted quality control for key documentation for Board / Executive 

Director interactions, as well as for external stakeholders (e.g., public board meetings, 

listening sessions, creditor sessions)

– Served as primary contact for all McKinsey Title III teams for Board, Executive Director 

& staff; as well as point of contact for baseline team in all external stakeholder 

interactions

– Prepared presentations for and presented key content for Executive Director and Board 

– Incorporated perspectives across teams on core measures, structural reforms with 

implications on HTA, PREPA, PRASA, etc.

– Managed relationships and worked closely with Board and Government economists to 

finalize estimations

– Facilitated Board sessions 

 Justin Reed (Senior Associate)

– Led the review, analysis, and response related to model structure and baseline 

assumptions included in draft government submission of revised fiscal plan

– Led the development of variance analysis highlighting outstanding key areas of 

difference between government draft fiscal plan and FOMB perspective 

– Drove development of fiscal plan financial exhibits 

– Detailed review and reconciliation of all financial exhibits included in the fiscal plan 

certified on April 20, 2018

– Drove development of and reviewed 40 year long-term expense and IFCU baseline 

projections 

– Drove initial team preparation for fiscal plan related creditor mediation session

 Dean Udom (Associate) 

– Maintained financial model supporting FOMB fiscal plan perspective including 

processing updates and general model maintenance 

– Development of key baseline related fiscal plan exhibits 

– Development of ad hoc financial analyses requested by FOMB to highlight key baseline 

related trends over the projected period

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– Supported updates to fiscal plan revenue and expense baseline assumptions 

– Participated in cross advisor calls and meetings to coordinate fiscal plan revision efforts 

and align assumptions with Government advisors

– Detailed review and reconciliation of fiscal plan exhibits included in the plan certified on 

April 20, 2018

 Peter Bailinson (Analyst)

– Refined and finalized analysis on fiscal measures related to pensions, subsidies, 

government rightsizing (including corrections, police, procurement, all other agencies), 

and revenues 

– Drove all Fiscal Plan content related to agency efficiencies, pensions, subsidies, Office 

of the CFO, and implementation planning

– Supported reinvestment scenario analysis, especially as related to UPR funding 

– Owned overall measures model and managed integration between measures and baseline 

models on core overlapping areas

 Adam Gerard (Analyst)

– Drove fiscal plan content related to baseline / macroeconomics, as well as history / 

background of Puerto Rico and context for current recession and crisis

– Finalized FOMB perspective on major revenue and expenditure assumptions (including, 

Act 154, corporate / individual / SUT revenues, Independently Forecasted Component 

Units, etc.)

– Helped lead problem solving with economists and demographer to refine 

macroeconomic model and projections (including disaster spend, pass-through, roll out) 

– Managed long-term fiscal plan assumptions and projections, including supporting 

reinvestment scenario analysis through long-term projections of various scenarios

 Avery Rasmussen (Analyst)

– Drove fiscal plan content related to healthcare baseline and measures, as well as 

structural reforms

– Led scenario reinvestment analysis, including by identifying potential reinvestment areas 

for healthcare and education / workforce

– Responsible for ongoing refinement of Medicaid baseline as new data became available 

to finalize FOMB perspective and led diligence of Government Fiscal Plan Medicaid 

baseline submissions

– Finalized interpretation of Medicaid federal funds – timing, eligibility, and overall 

impact on surplus 

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EXHIBIT E

February - April 2018 Invoices

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McKinsey & Company, Inc. Washington D.C. 

1200 19th Street NW Suite 1100 Washington DC 20036 

Telephone +1 202 662 3300 Fax +1 202 662 3175

The Financial Oversight and 

Management Board for Puerto Rico

Invoice No: USG-GPC018-4956

PO Box 195556 Consulting Agreement

San Juan, Puerto Rico 00919-5556 Client for Strategic Consulting support related to 

the Title III Cases

ATTN: Promesa Assistant Effective Agreement Date: November 1, 2017

accountspayable@promesa.gov

Invoice Date: 3/30/2018

Net 30

FFP Payment Schedule for Commonwealth Services

Invoice PoP: February 1, 2018 – February 28, 2018

Please reference the invoice number and invoice date on your remittance advice. 

For advice or questions on remittances, please contact Pamela Wertz 202-662-0060 or Jordan 

Mandell 202-662-0938.

Gross invoice amount for services performed outside Puerto Rico: $ 1,940,000.00

Gross invoice amount for services performed in Puerto Rico: $ -

Subtotal $ 1,940,000.00

Less withholding tax deducted at source $ -

Net Invoice Payable: $ 1,940,000.00

Total Invoice: $1,940,000.00

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McKinsey & Company, Inc. Washington D.C. 

1200 19th Street NW Suite 1100 Washington DC 20036 

Telephone +1 202 662 3300 Fax +1 202 662 3175

The Financial Oversight and 

Management Board for Puerto Rico

Invoice No: USG-GPC018-4992

PO Box 195556 Consulting Agreement

San Juan, Puerto Rico 00919-5556 Client for Strategic Consulting support related to 

the Title III Cases

ATTN: Promesa Assistant Effective Agreement Date: November 1, 2017

accountspayable@promesa.gov

Invoice Date: 4/24/2018

Net 30

FFP Payment Schedule for Commonwealth Services

Invoice PoP: March 1, 2018 – March 31, 2018

Please reference the invoice number and invoice date on your remittance advice. 

For advice or questions on remittances, please contact Pamela Wertz 202-662-0060 or Jordan 

Mandell 202-662-0938.

Gross invoice amount for services performed outside Puerto Rico: 1,649,000.00 $ 

Gross invoice amount for services performed in Puerto Rico: 409,859.15 $ 

Subtotal 2,058,859.15 $ 

Less withholding tax deducted at source (118,859.15) $ 

Net Invoice Payable: 1,940,000.00 $ 

Total Invoice: $1,940,000.00

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McKinsey & Company, Inc. Washington D.C. 

1200 19th Street NW Suite 1100 Washington DC 20036 

Telephone +1 202 662 3300 Fax +1 202 662 3175

The Financial Oversight and 

Management Board for Puerto Rico

Invoice No: USG-GPC021-5052

PO Box 195556 Consulting Agreement

San Juan, Puerto Rico 00919-5556 Client for Strategic Consulting support related to 

the Title III Cases

ATTN: Promesa Assistant Effective Agreement Date: November 1, 2017

accountspayable@promesa.gov Ammendment Date: April 1, 2018

Invoice Date: 5/31/2018

Net 30

FFP Payment Schedule for Commonwealth Services

Invoice PoP: April 1, 2018 – April 30, 2018

Please reference the invoice number and invoice date on your remittance advice. 

For advice or questions on remittances, please contact Pamela Wertz 202-662-0060 or Jordan 

Mandell 202-662-0938.

Gross invoice amount for services performed outside Puerto Rico: $ 1,125,200.00

Gross invoice amount for services performed in Puerto Rico: $ 1,147,605.63

Subtotal $ 2,272,805.63

Less withholding tax deducted at source $ (332,805.63)

Net Invoice Payable: $ 1,940,000.00

Total Invoice: $1,940,000.00

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UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.1

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

FIFTH MONTHLY FEE STATEMENT OF MCKINSEY & COMPANY, INC. 

WASHINGTON D.C. FOR COMPENSATION FOR SERVICES RENDERED FOR THE 

PERIOD MAY 1, 2018 THROUGH MAY 31, 2018

Name of Professional: McKinsey & Company, Inc. Washington D.C. 

 (“McKinsey Washington”)

Authorized to Provide Services to: The Financial Oversight and Management Board for 

Puerto Rico, as Representative of the Debtors 

Pursuant to PROMESA Section 315(b)

Period for which compensation

and reimbursement is sought: May 1, 2018 – May 31, 2018

Amount of compensation sought

as actual, reasonable and necessary: $1,417,500.00

Amount of expense reimbursement sought

sought as actual, reasonable and necessary2

: $0.00

Type of Fee Statement: Fifth Monthly Fee Statement: 

Commonwealth Title III Support3

 1 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number and the last four (4) 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax 

Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last Four Digits of Federal Tax ID: 

8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) 

(Last Four Digits of Federal Tax ID: 3808); and (iv) Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686). (Title III case numbers are listed as Bankruptcy Case numbers due to software limitations).

2 McKinsey Washington provides services on a fixed fee basis, and as such, seeks no reimbursement of expenses.

3 Notice of this Fifth Monthly Fee Statement (as defined herein) has been served in accordance with the Interim 

Compensation Procedures (as defined herein) and objections to payment of the amounts described in this Monthly 

Fee Statement shall be addressed in accordance with the Interim Compensation Procedures.

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2

1. Pursuant to the Interim Compensation Procedures, first entered by the Court on November 8, 

2017 [First Amended Order Setting Procedures for Interim Compensation and Reimbursement 

of Expenses of Professionals, Docket Number 1715] and amended on June 6, 2018 [Second 

Amended Order Setting Procedures for Interim Compensation and Reimbursement of 

Expenses of Professionals, Docket Number 3269] (the “Interim Compensation Procedures”), 

the applicable provisions of the United States Code (the “Bankruptcy Code”), the Federal 

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and the Local Bankruptcy Rules for 

the United States Bankruptcy Court for the District of Puerto Rico (the “Local Rules”), 

McKinsey & Company, Inc. Washington DC (“McKinsey Washington”), strategic consultants 

to The Financial Oversight And Management Board For Puerto Rico (the “Debtors” or the 

“Board”), hereby serves this Fifth Monthly Fee Statement for the allowance of compensation 

for reasonable and necessary strategic consulting services and support that McKinsey

Washington provided during the month of May 2018 (the “Fee Period”) pursuant to the 

“Commonwealth Title III Support” Scope of Work of the consulting agreement between 

McKinsey Washington and the Board for consulting services in support of the Title III 

litigation (Contract dated July 3, 2017, with Amendment No. 1 effective November 1, 2017

and Amendment No. 2 effective April 1, 2018 (the “Consulting Agreement”) and attached 

hereto as Exhibit A. Pursuant to the Bankruptcy Code, the Bankruptcy Rules the Local Rules, 

and the Interim Compensation Procedures (Section 11.a.), a Certification of Tyler Duvall, a 

Partner of McKinsey Washington, regarding compliance with the statutory and legal authority 

cited above is attached hereto as Exhibit B. Pursuant to the Interim Compensation Procedures 

(Section 11.b.), a Certification of Natalie Jaresko, Executive Director of the Board, authorizing 

the submission of this Fifth Monthly Fee Statement, is attached as Exhibit C.

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2. By this Fifth Monthly Fee Statement: Commonwealth Title III Support, McKinsey Washington 

seeks allowance of compensation for services rendered under the Consulting Agreement during 

the Fee Period in the amount of $1,275,750 (which equals 90% of the compensation sought 

herein, in accordance with Section 2.c of the Interim Compensation Procedures). 

Summary of Services Rendered During the Fee Period

3. During the Fee Period, McKinsey Washington provided a focused range of professional 

services as requested by the Board and reflected in the Consulting Agreement Scope of Work 

for Consulting Agreement Commonwealth Title III Support.

4

4. Included at Exhibit D is a list of team members who performed services during the Fee Period, 

along with a detailed description of McKinsey Washington’s scope of services, deliverables 

and team member activities, pursuant to the Commonwealth Title III Support Scope of Work 

during the Fee Period.

5. Included at Exhibit E is a copy of McKinsey Washington’s monthly invoice5 for fees incurred 

during the Fee Period pursuant to the Consulting Agreement in support of the Commonwealth 

Title III Scope of Work. McKinsey Washington’s fees – as agreed-upon in the Consulting 

Agreement and reflected in the invoices – are based on the usual and customary fees McKinsey 

Washington charges to clients and are commensurate with the services performed. As reflected 

in Exhibit E, McKinsey Washington incurred $1,417,500 in fees during the Fee Period, and 

now seeks reimbursement for 90% of such fees ($1,275,750).

 4 McKinsey Washington is simultaneously serving separate monthly fee statements for services rendered pursuant to

the other two (2) Scopes of Work under the Consulting Agreement.

5 The invoice included at Exhibit E reflects Puerto Rico withholding tax (29%), which is applicable to payments for 

services performed in Puerto Rico. In accordance with the terms of the Consulting Agreement, McKinsey

Washington has calculated the proportion of fees attributable to work performed in Puerto Rico and determined the 

applicable tax to be withheld by the client for payment to the Puerto Rico tax authorities. The net amount reflected 

on the invoice to be collected by McKinsey Washington is consistent with the terms of the Consulting Agreement.

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4

6. The efforts expended by McKinsey Washington during the Fee Period have been 

commensurate with the size and complexity of these cases. In rendering these services, 

McKinsey Washington has made every effort to maximize the benefit to the Debtors, to work 

efficiently with the other professionals employed in these cases, and to leverage staff 

appropriately in order to minimize duplication of effort.

7. McKinsey Washington respectfully submits that the amounts applied for herein for 

professional services rendered on behalf of the Board in these cases to date are fair and 

reasonable given: (a) the time expended; (b) the nature and extent of the services performed at 

the time at which such services were rendered; and (c) the value of such services.

Representations

8. While every effort has been made to include all fees incurred by McKinsey Washington during 

the Fee Period, some fees may not be included in this Fifth Monthly Fee Statement:

Commonwealth Title III Support due to certain unavoidable delays caused by accounting and 

processing during the Fee Period. McKinsey Washington reserves the right to make further 

application(s) for allowance of such fees not included herein. Subsequent fee statements and 

applications will be filed in accordance with the Bankruptcy Code, the Bankruptcy Rules, the 

Local Rules, and the Interim Compensation Procedures.

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5

Notice

9. Notice of this Fifth Monthly Fee Statement: Commonwealth Title III Support has been or will 

be provided by overnight delivery or e-mail to:

i. attorneys for the Oversight Board, Proskauer Rose LLP, Eleven Times 

Square, New York, NY 10036, Attn: Martin J. Bienenstock, Esq. 

(mbienenstock@proskauer.com) and Ehud Barak, Esq. 

(ebarak@proskauer.com), and Proskauer Rose LLP, 70 West Madison 

Street, Chicago, IL 60602, Attn: Paul V. Possinger, Esq. 

(ppossinger@proskauer.com);

ii. attorneys for the Oversight Board, O’Neill & Borges LLC, 250 Muñoz 

Rivera Ave., Suite 800, San Juan, PR 00918, Attn:Hermann D. Bauer, Esq. 

(hermann.bauer@oneillborges.com);

iii. attorneys for the Puerto Rico Fiscal Agency and Financial Advisory 

Authority, O’Melveny & Myers LLP, Times Square Tower, 7 Times 

Square, New York, NY 10036, Attn: John J. Rapisardi, Esq. 

(jrapisardi@omm.com), Suzzanne Uhland, Esq. (suhland@omm.com), and 

Diana M. Perez, Esq. (dperez@omm.com);

iv. attorneys for the Puerto Rico Fiscal Agency and Financial Advisory 

Authority, Marini Pietrantoni Muñiz LLC, MCS Plaza, Suite 500, 255 

Ponce de León Ave, San Juan, PR 00917, Attn: Luis C. Marini-Biaggi, Esq. 

(lmarini@mpmlawpr.com) and Carolina Velaz-Rivero Esq. 

(cvelaz@mpmlawpr.com);

v. the Office of the United States Trustee for the District of Puerto Rico, 

Edificio Ochoa, 500 Tanca Street, Suite 301, San Juan, PR 00901 (re: In re: 

Commonwealth of Puerto Rico);

vi. attorneys for the Official Committee of Unsecured Creditors, Paul Hastings 

LLP, 200 Park Ave., New York, NY 10166, Attn: Luc. A Despins, Esq.

(lucdespins@paulhastings.com);

vii. attorneys for the Official Committee of Unsecured Creditors, Casillas, 

Santiago & Torres LLC, El Caribe Office Building, 53 Palmeras Street, Ste. 

1601, San Juan, PR 00901, Attn: Juan J. Casillas Ayala, Esq. 

(jcasillas@cstlawpr.com) and Alberto J.E. Añeses Negrón, Esq. 

(aaneses@cstlawpr.com);

viii. attorneys for the Official Committee of Retired Employees, Jenner & Block 

LLP, 919 Third Ave., New York, NY 10022, Attn: Robert Gordon, Esq. 

(rgordon@jenner.com) and Richard Levin, Esq. (rlevin@jenner.com), and 

Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654, Attn: 

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Catherine Steege, Esq. (csteege@jenner.com) and Melissa Root, Esq. 

(mroot@jenner.com);

ix. attorneys for the Official Committee of Retired Employees, Bennazar, 

García & Milián, C.S.P., Edificio Union Plaza, PH-A, 416 Ave. Ponce de 

León, Hato Rey, PR 00918, Attn: A.J. Bennazar-Zequeira, Esq. 

(ajb@bennazar.org);

x. the Puerto Rico Department of Treasury, PO Box 9024140, San Juan, PR 

00902-4140, Attn: Reylam Guerra Goderich, Deputy Assistant of Central 

Accounting (Reylam.Guerra@hacienda.pr.gov); Omar E. Rodríguez Pérez, 

CPA, Assistant Secretary of Central Accounting 

(Rodriguez.Omar@hacienda.pr.gov); Angel L. Pantoja Rodríguez, Deputy 

Assistant Secretary of Internal Revenue and Tax Policy 

(angel.pantoja@hacienda.pr.gov); Francisco Parés Alicea, Assistant 

Secretary of Internal Revenue and Tax Policy 

(francisco.pares@hacienda.pr.gov); and Francisco Peña Montañez, CPA, 

Assistant Secretary of the Treasury (Francisco.Pena@hacienda.pr.gov);

xi. attorneys for the Fee Examiner, EDGE Legal Strategies, PSC, 252 Ponce 

de León Avenue, Citibank Tower, 12th Floor, San Juan, PR 00918, Attn: 

Eyck O. Lugo (elugo@edgelegalpr.com); and

xii. attorneys for the Fee Examiner, Godfrey & Kahn, S.C., One East Main 

Street, Suite 500, Madison, WI 53703, Attn: Katherine Stadler 

(KStadler@gklaw.com).

WHEREFORE, McKinsey Washington respectfully requests payment by the Debtors of 

$1,275,750 representing 90% of its fees incurred during the Fee Period and requested herein. 

Dated: July 16, 2018 McKinsey & Company, Inc. Washington DC

Washington DC 

 s/Tyler Duvall 

Tyler Duvall

Partner

McKinsey & Company, Inc. Washington DC

1200 19th St NW #1000

Washington, DC 20036

Telephone: (202) 662-3100

Email: Tyler_Duvall@Mckinsey.com

Strategic Consultant to the Debtors

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EXHIBIT A

Consulting Services Agreement

Between McKinsey Washington and the Board 

In Support of the Title III Litigation 

(entered in on or about and July 3, 2017, Amendment No. 1 effective 

November 1, 2017, Amendment No. 2 effective April 1, 2018 

(the “Consulting Agreement”) 

Statement of Work for Commonwealth Title III Support

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PROPRIETARY and CONFIDENTIAL

Sensitivity: Confidential 

CONSULTING AGREEMENT 

McKinsey & Company, Inc. Washington D.C. ("McKinsey") and The Financial Oversight and Management 

Board for Puerto Rico (the “Board” or the “Client”) hereby enter into the following terms effective July 3, 2017 in 

connection with consulting services that McKinsey provides to Client for Strategic Consulting support related to the 

Title III Litigation(the “Services”). 

 1. SERVICES. The working arrangements, including scope of the Services and Deliverables (as defined below) 

will be described in each mutually-executed Scope of Work, attached hereto as individual Attachments and incorporated 

herein, and cannot be materially amended without mutual agreement of the Parties. In order to be able to complete the 

Services within the agreed timeframe and budget and to fulfill its responsibilities on a timely basis, McKinsey will rely 

on the Client’s timely cooperation, including the Client and the Government of Puerto Rico’s making available relevant 

data, information and personnel, performing any tasks or responsibilities assigned to the Client or the Government of 

Puerto Rico and notifying McKinsey of any issues or concerns the Client may have relating to the Services. The Client 

is solely responsible for ensuring that the Government of Puerto Rico cooperates with responding to requests for purposes 

of the Services. The parties will meet at mutually agreed times to discuss the progress of the Services and to exchange 

feedback. During the course of the Services, priorities may shift or unexpected events may occur which may necessitate 

changes to the Services. In this event, the parties will jointly discuss the anticipated impact on the Services and agree on 

any appropriate adjustments, including to the scope of work, timeframe and budget. 

 2. COMPENSATION. The Client shall compensate McKinsey on a Firm Fixed Price basis in connection with the 

Services, as set forth in the Attachments. Any payments made by the Board to McKinsey hereunder are expressed net of 

any deductions or withholdings that may be applicable in respect of taxes, duties or levies and the Client will pay those 

amounts to McKinsey, in cleared funds. The parties agree that McKinsey is solely responsible for any applicable 

withholding and payment of taxes with respect to McKinsey Personnel as required by law. Neither party undertakes, 

pursuant to his Agreement or otherwise, to perform or discharge any liability or obligation of the other party, whether 

regulatory or contractual, or to assume any responsibility whatsoever for the conduct of the business or operations of the 

other party. Consistent with the public purpose of the Client’s mandate, this Agreement will be made publicly available 

subject to Section 5 below. McKinsey will invoice the Client for Deliverables in connection with the Services monthly 

or as otherwise set forth in the applicable Proposal. Except for Services provided under retainer, all invoices are to be 

paid in accordance with the court order setting procedures for interim compensation and reimbursement of professionals. 

 3. CONFIDENTIALITY. Subject to applicable public disclosure laws and the disclosure procedures established 

by Client that do not otherwise conflict with terms in this agreement, each Party agrees to keep confidential any 

confidential information furnished by either Party in connection with the Services (“Confidential Information"); 

provided, however, that the Client may disclose Confidential Information from McKinsey as necessary or desirable 

to carry out its statutory duties. The Client agrees to provide McKinsey prior notice of its intent to disclose 

Confidential Information from McKinsey. Without the Client’s explicit consent, McKinsey will disclose Confidential 

Information only to its employees, agents and contractors who have a need to know and are bound to keep it confidential 

and will use Confidential Information only for purposes of performing the Services. Confidential Information shall be 

all information other than information that is (i) or becomes publicly available other than as a result of a breach of this 

agreement, (ii) already known to the Receiving Party, (iii) independently acquired or developed by the Receiving Party 

without violating any of its obligations under this agreement, or (iv) is legally required to be disclosed. All documents 

supplied by the Receiving Party Client in connection with the services hereunder will, upon written request, be 

returned by the Receiving Party to the Disclosing Party or destroyed, provided that the Receiving Party may retain 

a copy for archival purposes. In performing the Services, McKinsey will use and rely primarily on the Confidential 

Information and on information available from public sources without having independently verified the same and does 

not assume responsibility for the accuracy or completeness of the Confidential Information or such other publicly 

available information and Section 5 herein. 

 4. INTELLECTUAL PROPERTY. Upon payment in full of McKinsey’s Fees associated with the relevant 

Services, the Client will own all reports, financial models and other deliverables prepared for and furnished to the Client 

by McKinsey in connection with the Services (the “Deliverables”), save that McKinsey retains ownership of all concepts, 

know-how, tools, frameworks, models, and industry perspectives developed or enhanced outside of or in connection with 

the Services (the “McKinsey Tools”), it being understood that none of the McKinsey Tools will contain the Client’s 

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Sensitivity: Confidential 

Confidential Information. To the extent the Deliverables include any McKinsey Tools, McKinsey hereby grants the Client 

a non-exclusive, non-transferable, non-sublicenseable, worldwide, royalty-free license to use and copy the McKinsey 

Tools solely as part of the Deliverables and subject to the limitations herein on disclosure of McKinsey materials and 

publicity. 

 5. DISCLOSURE OF McKINSEY MATERIALS; PUBLICITY. McKinsey’s work for the Client is confidential 

and for the Client’s internal use only; provided, however, the Client may disclose such work to the extent such disclosure 

is necessary or desirable to carrying out the Client’s statutory duties. The Client agrees that it will not disclose 

McKinsey’s name in relation to any disclosure of work hereunder without McKinsey’s consent. McKinsey will not 

disclose the Deliverables to any third parties (including any non-voting Board members) without the Client’s prior written 

permission. McKinsey further agrees not to use the Client’s name in any communication with any third party without the 

other party’s prior written permission, including in press releases or other public announcements. If the Client receives 

a public records request for Deliverables or other documents containing McKinsey information, the Client will allow 

McKinsey the ability to review the documents prior to disclosure to advise if the documents contain information subject 

to an exception or exemption to the relevant public records law. 

 6. SERVING COMPETITORS. It is McKinsey’s long-standing policy to serve competing clients and clients with 

potentially conflicting interests as well as counter-parties in merger, acquisition and alliance opportunities, and to do so 

without compromising McKinsey’s professional responsibility to maintain the confidentiality of client information. 

Consistent with such practice and McKinsey’s confidentiality obligations to its other clients, McKinsey is not able to 

advise or consult with the Client about McKinsey’s serving the Client’s competitors or other parties. To avoid situations 

of potential conflict, McKinsey will not, for a period of one year following an engagement for the Client, assign any 

consultant who receives Confidential Information in connection with such engagement to a competitively sensitive 

project, including a directly-conflicting engagement with the Government of Puerto Rico. Notwithstanding the 

foregoing, the Client understands and agrees that so long as McKinsey has appropriate procedures in place to mitigate 

any potential conflict, it may serve the Government of Puerto Rico on related matters. 

 7. INDEMNIFICATION. 

 (a) Deliverables produced hereunder are not intended as a substitute for financial, investment, legal, accounting or 

other professional advice, and McKinsey does not intend to supplant the Client or the Government of Puerto Rico’s 

management or other decision-making bodies. 

 (b) The Client and the Government of Puerto Rico remain solely responsible for its decisions, actions, use of the 

Deliverables and compliance with applicable laws, rules and regulations. McKinsey agrees to indemnify and hold the 

Client harmless from and against all loss, liability, damage, cost, or expense (including reasonable attorney fees) 

(“Losses”) to the extent those Losses are determined by a final, non-appealable order or arbitral award to have resulted 

from McKinsey’s gross negligence or willful misconduct in the performance of the Services. 

 (c) The Client agrees to indemnify and hold McKinsey harmless from any Losses (including the costs of McKinsey’s 

professional time) relating to the Services (including any Losses asserted by the Client, its agents or representatives, or 

third parties and any Losses sustained by McKinsey when participating in any legal, regulatory, or administrative 

proceeding relating to the Services), except to the extent those Losses are determined by a final, non-appealable order or 

arbitral award to have resulted from McKinsey’s gross negligence or willful misconduct in the performance of the 

Services. 

 (d) The Client further indemnifies McKinsey, including any member, officer or employee thereof including but not 

limited to the Revitalization Coordination role, in any instance where it is a party, or is threatened to be made a party, to 

any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, 

against judgments, fines, amounts paid in settlement and expenses (including attorneys’ fees) actually and reasonably 

incurred by him or her in connection with such action, suit or proceeding, unless it acted with bad faith or engaged in 

intentional misconduct and, with respect to any criminal action or proceeding, unless it knew or should have known the 

conduct was unlawful. The termination of any act, suit or proceeding by judgment, order, settlement, conviction, or upon 

a plea of nolo contender or its equivalent, shall not, of itself, create a presumption that McKinsey (or any of its members, 

officers or employees) did not satisfy these standards. 

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Sensitivity: Confidential 

Neither party will be liable for any lost profits or other indirect, consequential, incidental, punitive or special damages. 

In no event shall McKinsey’s liability to the Client in connection with the Services relating to an engagement for the 

Client exceed the amount paid to McKinsey by the Client in connection with such engagement. 

 8. AUTHORITY OF THE BOARD. The Client represents and warrants it has the authority to enter into this 

Agreement for the Services. In the event that it is determined that the Client did not have authority to authorize all or 

part of this agreement, McKinsey may make the sole determination as to whether to terminate the Agreement according 

to Section 10 herein, or continue with those parts of the Services for which the Client does have authority. The Client 

agrees to indemnify and hold McKinsey harmless from any Losses (including the costs of McKinsey’s professional time) 

resulting from a breach of this Section 8 and/or a misrepresentation by the Client of authority to act (including any Losses 

asserted by the Client, its agents or representatives, or third parties and any Losses sustained by McKinsey when 

participating in any legal, regulatory, or administrative proceeding relating to the Services). 

 9. CONFLICTS OF INTEREST. The Client agrees that performance of Services hereunder shall not conflict 

McKinsey from serving the Government of Puerto Rico or any stakeholders to the work, subject to the restrictions in 

Section 6 – “Serving Competitors.” 

 10. TERM AND TERMINATION. This agreement takes effect on the date the Services commenced and shall 

continue until terminated in accordance with its terms. Either party may terminate the Services at any time effective 

upon 30 days written notice to the other. In the event of any termination, the Client will pay McKinsey for the work 

completed up to the effective date of termination. 

 11. MISCELLANEOUS. This agreement and the Proposals constitute the entire agreement between the parties, and 

there are no prior or contemporaneous oral or written representations, understandings or agreements relating to this 

subject matter that are not fully expressed herein or therein. This agreement and the Proposals shall be governed by and 

construed in accordance with the laws of the State of New York without regard to conflicts of law principles and shall 

inure to the benefit of and be binding on the successors and assigns of the Client and McKinsey. The following Sections 

shall survive the completion or any termination of the Services: 3 (Confidentiality), 4 (Intellectual Property), 5 

(Disclosure of McKinsey Materials; Publicity), 6 (Serving Competitors), 7 (Indemnification), 8 (Term and Termination) 

and 9 (Miscellaneous) and any other provision which by law or by its nature should survive. Neither party may assign 

its rights or obligations under this agreement to any person or entity without the written consent of the other party, not to 

be unreasonably withheld, provided, however, that either party may assign its rights and obligations under this agreement 

to its affiliates upon reasonable written notice to the other party but without the written consent of the other party. 

Assignment shall not relieve either party of its obligations hereunder. McKinsey is an independent contractor and not 

the Client’s agent or fiduciary. Notwithstanding any course of dealings of the parties at any time or any statement to the 

contrary contained therein, no purchase order, invoice or other similar document issued by a party shall be construed to 

modify the terms of this agreement. Rights and remedies provided in this agreement are cumulative and not exclusive 

of any right or remedy provided at law or in equity. 

The Financial Oversight and Management Board for Puerto Rico McKinsey & Company, Inc., Washington D.C. 

(Client)

 

_________________________________ _________________________________ 

Name: Name: Tyler Duvall 

Title: Title: Partner 

Date: Date: September 8, 2017 

 

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Sensitivity: Confidential 

ATTACHMENT 1 

Scope of Work 

For 

Commonwealth Title III Support 

Services: 

In regards to support for the Commonwealth Title III proceedings to the Board to include: 

Activities: 

 Participation in and coordination of cross advisor meetings (Board, Commonwealth and/or 

Stakeholders) regarding Title III related matters 

 Preparation of materials necessary for supporting Fiscal Plan litigation, which could include: 

 Assemble fact base regarding process for creation, stress testing and certification of the fiscal 

plan 

 Assemble fact base regarding additional analyses created for the FOMB with respect to 

evaluating/stress testing the FY18 fiscal plan 

 Collect and summarize key input sources and supporting analysis for key fiscal plan assumptions 

 Assemble fact base regarding process and supporting analysis used to identify and evaluate key 

measures proposed and finally included in the fiscal plan 

 Prepare and/or evaluate alternative fiscal plan scenario analyses in support of requested 

alternative contexts 

 Prepare analyses in support of litigation activities 

 As needed, ad-hoc analyses and/or responses to questions regarding litigation or potential litigation 

relating to the Fiscal Plan or other Commonwealth Title III matters 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverable: 

 Monthly report regarding liquidity performance and strategic choices on liquidity related to Title III 

proceedings and/or ad hoc analysis performed within that month.

Support Structure and Cost: 

 The cost for this work will be $740,000 per month and will continue so long as the 

Commonwealth Title III process continues or the Board no longer believes the support is 

necessary. 

 If additional deliverables are required by McKinsey beyond this core support this contract 

will be amended to reflect any required support.

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Sensitivity: Confidential 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

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Sensitivity: Confidential 

ATTACHMENT 2 

Scope of Work 

for 

Title III Support for PREPA 

Services: 

In regards to work specifically supporting the Title III proceedings for the Board with relation to 

PREPA, McKinsey will support the Board in the following ways: 

1. Coordinate and provide analysis related to development of the transformation plan and plan 

of arrangement for PREPA

Activities: 

The core activities include working directly with the Board, the Executive Director and Board Staff 

in the following areas (as well as ad hoc and as needed support): 

 Establishment of the PREPA working group for Title III, including working group protocol, 

governance, cadence, targets and coordination 

 Lead PREPA working group for Title III, including leading meetings, developing core 

materials, workplans, agendas and coordination with PREPA, AAFAF and its experts and 

advisors 

 Develop transformation plan for PREPA for Title III which includes but is not limited to: 

 - Operational stabilization plans focused on near and immediate term actions to maintain 

sustainable operations and launch capex programs with specific implementation plans, 

resourcing and costing supporting their delivery 

 - Debt restructuring terms and plans, agreed with creditors to the extent possible 

 - Detailed privatization/corporatization plans supported by financial models and market 

engagement 

 - Detailed action plans to implement all measures identified in the Fiscal Plans with 

additional measures to achieve Board targets 

 - Governance and management plans that will enable delivery of actions 

 - Stakeholder management plans and demonstrable success in engaging key stakeholders 

 such as regulators 

 - Macro-resource planning when required (e.g. updated IRP for PREPA) 

 - Clear assessments of economic and social impacts on the people of Puerto Rico 

 - Clear timelines for delivery of the plan 

 Coordinate development of and approval by the Board of other submissions related to the 

Title III proceedings, including Plans of Arrangements, financial disclosure, implementation 

plans, contract assumption and rejection 

 Work with Board management and Board PREPA subcommittee to provide updates and take 

guidance on PREPA transformation and Title III 

 Monitor implementation of all aspects of the PREPA transformation plans and Title III plans 

 Escalating deviations from plans and defining solutions for compliance 

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Sensitivity: Confidential 

 Conduct limited market engagement as necessary to identify potential privatization options 

for PREPA 

 Lead development of an integrated resource plan for PREPA to support the Transformation 

Plan in coordination with PREC and PREPA 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverables: 

A monthly report describing progress against transformation objectives, as well as specific 

supporting analyses, including: 

 

 Detailed action plans, including e.g. structural solutions, governance, likely economic 

impacts and operational stabilization 

 Synopsis of market perspectives related to different potential options 

 Integrated resource plan 

Support Structure and Cost: 

 The cost for this work will be $740,000 per month and will continue so long as the Title III 

process continues or the Board no longer believes the support is necessary. 

 If additional deliverables are required by McKinsey beyond this core support this contract 

will be amended to reflect any required support. 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

 

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Sensitivity: Confidential 

ATTACHMENT 2 

Scope of Work 

for 

Title III Support for HTA 

Services: 

In regards to work specifically supporting the Title III proceedings for the Board with relation to HTA, 

McKinsey will support the Board in the following ways: 

Coordinate and provide analysis related to development of the transformation plan and plan of 

arrangement for HTA

Activities: 

The core activities include working directly with the Board, the Executive Director and Board Staff 

in the following areas (as well as ad hoc and as needed support): 

 Establishment of the HTA working group for Title III, including working group protocol, 

governance, cadence, targets and coordination 

 Lead HTA working group for Title III, including leading meetings, developing core 

materials, workplans, agendas and coordination with HTA, AAFAF and its experts and 

advisors 

 Develop transformation plan for HTA for Title III which includes but is not limited to: 

 - Operational stabilization plans focused on near and immediate term actions to maintain 

sustainable operations and launch capex programs with specific implementation plans, 

resourcing and costing supporting their delivery 

 - Debt restructuring terms and plans, agreed with creditors to the extent possible 

 - Detailed privatization/corporatization plans supported by financial models and market 

engagement 

 - Action plans to implement all measures identified in the Fiscal Plans with additional 

measures to achieve Board targets 

 - Governance and management plans that will enable delivery of actions 

 - Stakeholder management plans and demonstrable success in engaging key stakeholders 

 such as regulators 

 - Macro-resource planning when required 

 - Clear assessments of economic and social impacts on the people of Puerto Rico 

 - Clear timelines for delivery of the plan 

 Coordinate development of and approval by the Board of other submissions related to the 

Title III proceedings, including Plans of Arrangements, financial disclosure, implementation 

plans, contract assumption and rejection 

 Work with Board management and Board HTA subcommittee to provide updates and take 

guidance on HTA transformation and Title III 

 Monitor implementation of all aspects of the HTA transformation plans and Title III plans 

 Escalating deviations from plans and defining solutions for compliance 

 Support litigation related to the HTA proceedings, which has commenced 

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Sensitivity: Confidential 

 As applicable to McKinsey's Services regarding FOMB fiscal plans and work relative to the 

Commonwealth and its instrumentalities, it is the expectation of McKinsey and the Board that as part 

of the Services McKinsey shall: 

 Provide expert testimony (at most 2 per quarter) 

 Participate in and/or assist the Board with mediation sessions and Board meetings or 

conferences, which may include presentations 

 Provide support at related stakeholder interactions, which may include presentations 

Deliverables: 

A monthly report describing progress against transformation objectives, as well as specific 

supporting analyses, including: 

 

 Detailed action plans, including e.g. structural solutions, governance, likely economic 

impacts and operational stabilization 

 Synopsis of market perspectives related to different potential options 

 Integrated resource plan 

Support Structure and Cost: 

 The cost for this work will be $720,000 per month and will continue so long as the HTA 

Title III process continues or the Board no longer believes the support is necessary. 

 If additional deliverables are required by McKinsey beyond this core support, this contract 

will be amended to reflect any required support. 

Payment Schedule 

McKinsey will submit a Monthly Fee Statement for the deliverables provided on or before the 25th day 

of each calendar month. 

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EXHIBIT B

Certification of McKinsey Washington Partner Tyler Duvall

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9

UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.

-------------------------------------------------------------x

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

CERTIFICATION OF TYLER DUVALL

I, Tyler Duvall, hereby declare the following under penalty of perjury:

1. I am one of the McKinsey Washington Partners providing consulting services related to 

the above-captioned Title III case;

2. I have personally performed many of the professional services rendered by McKinsey 

Washington as strategic consultant to the Debtors and am familiar with all other work performed 

on behalf of the Debtors by the Partners, Associates, and other persons in the Firm;

3. The facts set forth in the foregoing Fifth Monthly Fee Statement: Commonwealth Title III 

Support are true and correct to the best of my knowledge, information, and belief;

4. I have reviewed the Interim Compensation Procedures and believe that McKinsey

Washington’s Fifth Monthly Fee Statement: Commonwealth Title III Support complies therewith; 

and

5. In accordance with Section 11.a. of the Interim Compensation Procedures, I hereby certify 

as follows:

i. No public servant of the Department of Treasury is a party to or has any interest in 

the gains or benefits derived from the Consulting Agreement (the contract) that is 

the basis of this invoice;

ii. The only consideration for providing services under the Consulting Agreement (the 

contract) is the payment agreed upon with the authorized representatives of the 

Debtor;

iii. The amounts of these invoice are reasonable; 

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10

iv. The services were rendered and the corresponding payment has not been made; and 

v. To the best of my knowledge, McKinsey Washington does not have any debts owed 

to the Government of Puerto Rico or its instrumentalities.

Pursuant to 28 U.S.C. §1746, I declare under penalty of perjury that the foregoing is true and 

correct.

Dated: July 16, 2018

Washington, DC 

 s/Tyler Duvall 

Tyler Duvall

Partner

McKinsey & Company, Inc. Washington DC

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EXHIBIT C

Certification of FOMB Executive Director Natalie Jaresko

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UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

-------------------------------------------------------------x 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.

 Debtors.

-------------------------------------------------------------x

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

CERTIFICATION OF THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR 

PUERTO RICO AUTHORIZING SUBMISSION OF MCKINSEY WASHINGTON 

MONTHLY FEE STATEMENTS 

In accordance with the Second Amended Order Setting Procedures for Interim Compensation and 

Reimbursement of Expenses of Professionals [Docket Number 3269, June 6, 2018] (“Interim 

Compensation Procedures”), I hereby certify as follows: 

1. I am the Executive Director of The Financial Oversight And Management Board For Puerto 

Rico (“FOMB”); 

2. On or about July 3, 2017, on my authorization, FOMB entered into a consulting agreement 

with McKinsey Washington for consulting services in support of the Title III litigation, 

which was first amended effective November 1, 2017, and amended again effective April 

1, 2018 (the “Consulting Agreement”); 

3. McKinsey Washington has satisfactorily performed and fulfilled its obligations under the 

Consulting Agreement for the services McKinsey provided in February, March and April 

2018 under each of the three (3) workstreams of the Consulting Agreement, namely 

“Commonwealth Title III Support”, “Title III Support for PREPA”, and “Title III 

Support for HTA”; now, therefore, 

4. Pursuant to Section 11.b. of the Interim Compensation Procedures, McKinsey Washington 

is hereby authorized to submit its Consolidated Third Monthly Fee Statements for the 

allowance of compensation for reasonable and necessary strategic consulting services and 

support provided during the month of May 2018, pursuant to each of the three (3) 

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workstreams of the Consulting Agreement, namely “Commonwealth Title III Support”, 

“Title III Support for PREPA”, and “Title III Support for HTA.” 

Dated: July 12, 2018 _________________________ 

Natalie Jaresko 

Executive Director 

The Financial Oversight and Management Board 

For Puerto Rico 

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EXHIBIT D

Title III Support for Commonwealth

May 2018

Summary of Work

The scope of services and deliverables related to Commonwealth Title III during May 2018 

involved updating the Commonwealth Fiscal Plan to reflect new policy realities based on the 

Governments decisions related to labor reform. It involved supporting the negotiation of a new 

accommodation between the Government of Puerto Rico and the Board to amend the 

Commonwealth Fiscal Plan (to include repeal of Law 80 and investments to advance reform and 

reduce implementation risk), and then updating the Commonwealth Fiscal Plan and financial 

model for a new certification at the end of the month (on May 30th). The core activities included 

working directly with the Board, the Executive Director, and Board Staff in the following areas 

(and providing ad hoc support as needed): 

McKinsey Washington’s Commonwealth Title III Team Detailed Activities by Deliverable:

 Fiscal plan update incorporating technical updates and changes arising from 

accommodation reached with the Government 

– Led strategy sessions with Board members, advisors, and staff to understand potential 

changes needed in the Fiscal Plan based on Governor’s proposals 

– Conceptualized and modeled new financial scenarios to help the Board determine the 

revised accommodation with the Government of Puerto Rico

– Reviewed and suggested potential economic development investments as part of the 

accommodation process

– Edited Fiscal Plan word document to integrate new details surrounding the Government 

accommodation

– Investigated impact of new Federal funding announcements revealed following the April 

19th certification for inclusion in the end-of-May Fiscal Plan update

– Researched and refined technical adjustments as part of the Fiscal Plan update process 

– Provided long-term macroeconomic, baseline, measures and structural reform 

assumptions for long-term financial projections and in support of the Debt Sustainability 

Analysis 

 Organization of May15th creditor mediation session and development of supporting 

materials 

– Developed Board presentations, talking points, fact pacts, and “FAQ” documents on the 

Fiscal Plan in order to support certification and explanation of plan to various 

stakeholder groups

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– Prepared for and presented at mediation session between the Board and creditor groups 

on May 15th and May 16th

 Ad hoc financial analysis and support regarding development of the updated Fiscal Plan

model and FY19 budget

– Updated, maintained, and conducted ongoing quality assurance of inputs to 

macroeconomic models forecasting the future course of the economy of Puerto Rico

– Supported translation of Fiscal Plan into FY19 budget 

– Developed initial draft of best interest test based on fiscal plan certified April 19, 2018

McKinsey Washington’s Commonwealth Title III Team Detail and Contributions

 Bertil Chappuis (Senior Partner)

– Provided overall guidance across all McKinsey efforts and managed overall relationships

with Board, Board staff and other advisors to ensure efficient and effective execution of 

work

– Participated in weekly Executive Board and Subcommitee calls to review progress and

advise on key decisions

– Reviewed and provided feedback on all interim and final documents including materials 

prepared for creditor mediation sessions and Board strategy session on May 17

– Attended creditor mediation sessions on May 15 and May 16

– Attended Board strategy meeting on May 17

 Kevin Carmody (Senior Partner)

– Participated in creditor mediation session materials preparation and review

– Participated in advisor coordination meetings regarding creditor meeting content 

development and preparation

– Provided oversight and helped development of best interest analysis 

 Thomas Dorman (Senior Partner)

– Participated in working sessions with team regarding preparing for creditor mediation 

session

– Participated in select Board and FOMB sessions discussing next steps post fiscal plan 

certification

 Tyler Duvall (Partner)

– Led overall efforts across all topic areas and worked daily with each of the on the 

different Title III “on the ground” teams 

– Reviewed key documentation for Board / Executive Director interactions, as well as for 

external stakeholders (e.g., public board meetings, listening sessions, creditor sessions)

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– Served as primary leadership contact for all McKinsey Title III teams for Board, 

Executive Director & staff

– Problem solved with team regularly 

– Worked to help integrate Commonwealth and instrumentalities to ensure consistency of 

measures and structural reforms (where relevant)

– Helped lead Board sessions and led overall McKinsey team with respect to mediation 

sessions

 Jonathan Davis (Partner) 

– Provided overall guidance and quality control on Board materials and briefing 

documents related to the Commonwealth fiscal plan

– Prepared and reviewed materials for creditor interactions with particular focus on macro 

and revenue questions

– Presented materials at creditor mediation session in New York and answered questions

– Provided and facilitated expert insight on a broad range of fiscal plan topics, e.g., 

revenue collections, private insurance spend, ease of doing business, etc.

– Provided input and advice on fiscal plan topics in Executive Director and Board 

briefings

 Ojas Shah (Partner)

– Led overall work with regards to fiscal plan model refinement

– Participate in creditor mediation session materials preparation and review

– Participate in advisor coordination meetings regarding creditor meeting content 

development and preparation

– Participate in FY19 budget process discussion with FOMB and AAFAF representatives 

and advisors

– Lead analysis definition and oversight of best interests analysis development

– Participated in FOMB and Executive Director calls to provide updates regarding Title III 

and Commonwealth Fiscal Plan related matters and analyses

 Todd Wintner (Associate Partner)

– Provided expert guidance to FOMB on mapping of fiscal plan expenditures to budget 

files, particularly for areas of education, health care and personnel

– Provided expert guidance and supported FOMB in preparation of mediation materials 

related to ongoing Title III negotiations as related to impact of fiscal and structural 

measures

– Provided expert guidance on and attended both internal FOMB and external government 

meetings to discuss adjustments and update to new certified fiscal plan 

 Sara O’Rourke (Engagement Manager)

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– Managed working team across all topic areas, and drove progress on the ground (scoping 

work, determining workplan, scheduling key touchpoints, pulling in expertise where 

needed)

– Reviewed and conducted quality control for key documentation for Board / Executive 

Director interactions, as well as for external stakeholders (e.g., public board meetings, 

listening sessions, creditor sessions)

– Served as primary contact for all McKinsey Title III teams for Board, Executive Director 

& staff

– Prepared presentations for and presented key content for Executive Director and Board 

– Incorporated perspectives across teams on core measures, structural reforms with 

implications on HTA, PREPA, PRASA, etc.

– Facilitated Board sessions and served as agency efficiencies and overall fiscal expert in 

mediation session

 Justin Reed (Senior Associate)

– Organized and participated in cross advisor calls and meetings to coordinate mediation 

support efforts with Government advisors

– Led development of mediation preparation and supporting materials

– Supported efforts to translate the certified fiscal plan into FY19 budget

– Led workstream to develop initial draft of best interest test based on certified fiscal plan 

– Reviewed and updated categorical privilege log and oversaw other work streams related 

to creditor engagement

 Dean Udom (Associate)

– Developed draft FY19 Commonwealth budget file compliant with Fiscal Plan certified 

April 19, 2018

– Developed draft best interest test analytical framework and comprehensive model

– Supported development of fiscal plan certified June 29, 2018

 Caroline Keller-Lynn (Associate)

– Drove fiscal plan content related to healthcare and education 

– Drove all Fiscal Plan content related to agency efficiencies, pensions, subsidies, Office 

of the CFO, and implementation planning

– Responsible for ongoing refinement of Medicaid baseline as new data became available 

to finalize FOMB perspective and led diligence of Government Fiscal Plan Medicaid 

baseline submissions

– Finalized interpretation of Medicaid and education federal funds – timing, eligibility, 

and overall impact on surplus 

 Peter Bailinson (Analyst)

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– Managed working team responsible for formulating new Government accommodation, 

including all iterations needed to finalize the accommodation and translating it into the 

May 30th Commonwealth Fiscal Plan

– Refined and finalized analysis on fiscal measures related to pensions, subsidies, 

government rightsizing (including corrections, police, procurement, all other agencies), 

and revenues 

– Led work on documentation of assumptions and supporting documents for mediation 

presentation 

– Owned overall measures model and managed integration between measures and baseline 

models on core overlapping areas

 Logan Schulte (Analyst)

– Supported preparation of responses to creditor questions and additional materials needed 

by the FOMB and advisors related to May 15th mediation sessions

– Developed team responses/ coordinated team responses to various areas of creditor 

engagement

– Coordinated with Proskauer on development of materials for submission of updated 

categorical privilege log

– Developed preliminary view related to methods, inputs, and presentational structure for 

draft best interest test related to fiscal plan certified on April 19, 2018

 Adam Gerard (Analyst)

– Drove fiscal plan content related to baseline / macroeconomics, as well as history / 

background of Puerto Rico and context for current recession and crisis

– Helped lead problem solving with economists and demographer to refine 

macroeconomic model and projections (e.g., disaster spend, pass-through, roll out) 

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EXHIBIT E

May 2018 Invoice

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McKinsey & Company, Inc. Washington D.C. 

1200 19th Street NW Suite 1100 Washington DC 20036 

Telephone +1 202 662 3300 Fax +1 202 662 3175

The Financial Oversight and 

Management Board for Puerto Rico

Invoice No: USG-GPC021-5077

PO Box 195556 Consulting Agreement

San Juan, Puerto Rico 00919-5556 Client for Strategic Consulting support related to 

the Title III Cases

ATTN: Promesa Assistant Effective Agreement Date: November 1, 2017

accountspayable@promesa.gov Ammendment Date: April 1, 2018

Invoice Date: 6/20/2018

Net 30

FFP Payment Schedule for Commonwealth Services

Invoice PoP: May 1, 2018 – May 31, 2018

Please reference the invoice number and invoice date on your remittance advice. 

For advice or questions on remittances, please contact Pamela Wertz 202-662-0060 or Jordan 

Mandell 202-662-0938.

Gross invoice amount for services performed outside Puerto Rico: 1,219,050.00 $ 

Gross invoice amount for services performed in Puerto Rico: 279,507.04 $ 

Subtotal 1,498,557.04 $ 

Less withholding tax deducted at source (81,057.04) $ 

Net Invoice Payable: 1,417,500.00 $ 

Total Invoice: $1,417,500.00

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