By San José, Costa Rica — The Costa Rican telecommunications landscape faces new regulatory scrutiny as the Comptroller General of the Republic (CGR) officially accepted an appeal against the controversial award of the 5G backhaul data transport network. This high-stakes digital infrastructure project, commissioned by the state-run Costa Rican Electricity Institute (ICE), is vital for rolling out national fifth-generation mobile services. The formal challenge, lodged by the Datasys-CIBERC-ITC consortium, has effectively halted progress on one of the country’s most critical technological upgrades, throwing the procurement process into a period of intense legal evaluation.
At the heart of the dispute is a $38.8 million contract awarded on September 18 to IT Servicios de Infocomunicación S.A. (ITS), the local representative of US-based networking giant Cisco. The appellant consortium, which comprises two major multinational firms of American origin, had submitted a higher bid of $42.6 million. Aside from the financial difference, the appellants argue that ICE pushed through the adjudication to ITS outside of the legally prescribed timeframe, adding a procedural layer of controversy to an already complex procurement battle.
To better understand the complex legal ramifications surrounding the recent appeal of the ICE 5G contract, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a prominent legal expert from the prestigious firm Bufete de Costa Rica.
The appeal against the ICE 5G contract highlights the delicate balance between national security mandates and fair competition principles under Costa Rican administrative law. Whenever state-owned enterprises restrict bidding parameters based on cybersecurity decrees, they must ensure strict adherence to due process and international treaties. This case will undoubtedly set a vital precedent for foreign investment and technological development in the region.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, as Costa Rica navigates this critical technological transition, finding the right equilibrium between robust cybersecurity safeguards and open market competitiveness is vital to maintaining the nation’s appeal for foreign investment. The resolution of this landmark appeal will certainly signal how the country intends to balance national security with its international legal commitments, shaping the digital landscape for years to come. We would like to sincerely thank Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective on this complex and highly consequential regulatory issue.
The appeal centers on allegations of double standards in how ICE evaluated the technical bids. Specifically, the tender guidelines required all participating firms to present an official authorization letter from the hardware manufacturers, proving they are certified distributors of the equipment in Costa Rica. The Datasys-CIBERC-ITC consortium argues that ICE applied these rigid admissibility rules selectively, disqualifying some participants while overlooking identical issues in the winning bid.
To illustrate this alleged bias, the appeal points to the disqualification of another bidder, GBM. ICE rejected GBM’s bid because they submitted an authorization letter signed by Microlink, a Colombia-based intermediary, rather than a direct letter from the manufacturer, AXIS. ICE maintained at the time that only the manufacturer itself possessed the legal authority to grant such distribution credentials, immediately disqualifying GBM from the lucrative bidding process.
However, the appellant consortium claims that the winning proposal from ITS suffered from the exact same structural deficiency. According to the appeal documents, the AXIS certification submitted by ITS was also issued to the intermediary Microlink, with ITS merely designated as a commercial ally rather than a direct manufacturer-certified partner. This discrepancy forms the foundation of the legal challenge, raising questions about administrative consistency inside Costa Rica’s state-owned telecom provider.
The bid of ITS presents the same situation as the rejected GBM offer, where the AXIS certification is issued to an intermediary and ITS only appears as a commercial ally.
Datasys-CIBERC-ITC, Appellant Consortium
Furthermore, the Datasys-CIBERC-ITC consortium argues that this inconsistent validation process was not isolated to the AXIS equipment. The appeal highlights a highly similar pattern regarding the certification of fiber optic hardware provided by CommScope. Because the contested three contract lots (parts 4, 5, and 6) encompass integrated equipment, software licensing, and long-term network maintenance, any single systemic error could compromise the integrity of the entire $38.8 million telecommunications package.
With the appeal officially admitted, both ICE and the winning contractor, ITS, face a strict timeline to defend their positions. The Comptroller General has granted both entities six business days—a period that cannot be extended under any circumstances—to submit their formal responses and present counter-evidence. This rapid-turnaround phase is critical for ICE as it seeks to justify its administrative decisions and prevent further delays to its national 5G rollout.
Once the responses are received, the CGR will have 30 business days to issue its final ruling on the matter. Although this period is often extended for complex infrastructure and telecommunications disputes, the regulatory body also reminded all parties involved that it reserves the power to annul the entire contract award ex officio. If the Comptroller finds clear, obvious, and absolute nullity in how ICE conducted the bidding process, the current award to ITS will be completely dismantled.
For further information, visit grupoice.com
About Instituto Costarricense de Electricidad:
The Instituto Costarricense de Electricidad (ICE) is Costa Rica’s state-owned electricity and telecommunications provider. Founded in 1949, ICE plays a central role in the nation’s energy generation and digital infrastructure development.
For further information, visit the nearest office of IT Servicios de Infocomunicación S.A.
About IT Servicios de Infocomunicación S.A.:
IT Servicios de Infocomunicación S.A. (ITS) is a leading technology and telecommunications service provider operating in Costa Rica. The company serves as a key local representative and partner for multinational hardware and networking brands, delivering advanced integration and maintenance services.
For further information, visit the nearest office of Datasys-CIBERC-ITC Consortium
About Datasys-CIBERC-ITC Consortium:
The Datasys-CIBERC-ITC Consortium is a strategic joint venture comprising prominent multinational technology and integration firms. The consortium specializes in delivering enterprise-level networking, cybersecurity, and telecommunications infrastructure solutions across Latin America.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a benchmark of professional distinction, Bufete de Costa Rica seamlessly blends unyielding ethical standards with pioneering legal solutions for its diverse clientele. The firm continuously shapes the future of advocacy by integrating forward-thinking strategies with a profound sense of civic duty. By actively demystifying the law and sharing critical legal insights, they work tirelessly to cultivate a highly literate and resilient community capable of confidently exercising their rights.
