Costa Rica - Selling to the Public Sector

Selling to the Public Sector

Last published date: 2024-02-03

The Costa Rican Government procurement system is governed by the Costa Rican Financial Administration Law.

Government entities generally acquire their goods and services through public tenders, which are published in the official newspaper, La Gaceta. Over the last ten years, the Costa Rica government acquired more than $6 billion of goods and services.

In 2016 the Costa Rican government announced that it was migrating to the Sistema de Compras Públicas (SICOP) which is the primary source for public procurements in the country. Local and foreign companies that wish to participate in this electronic method of public procurement may do so online here.

Early in 2019, the government announced the full integration to SICOP by three of the largest state-owned enterprises, the Costa Rican Institute of Electricity and Telecommunications (ICE), the Costa Rican Institute of Social Security (Caja Costarricense de Seguro Social-CCSS), and the National Institute of Insurance (INS). The CCSS is the second largest government entity that requires products and services for their operations (drugs, pharmaceuticals, medical equipment, supplies, etc.) to participate in SICOP. The CCSS’ website publishes their requirements for all public hospitals (10), clinics (500), and “EBAIS” (small medical units with basic equipment-1000).

Certain purchases are made directly from suppliers that have been prequalified and preregistered with government entities. However, public procurement, at times, still lacks transparency. There are plans to migrate the system, making SICOP the primary platform used for public procurement; but it is unclear when, or if, this complete system migration will occur.

Foreign companies may establish a representative through a Power of Attorney for a specific tender. This representative does not need to be from Costa Rica. A general Power of Attorney can also be given to an individual or company to represent the foreign company in various tenders for a specified period.

The local representative should be able to translate tender documents from Spanish into English and assist in preparing bid offers in Spanish. Some large projects may require the presence of U.S. company officials in Costa Rica to better evaluate the requirements and prepare competitive offers to the Costa Rican Government entity.

Foreign companies may bid directly on government tenders in Costa Rica. However, when competing for government contracts, there is a significant advantage in having a strong local partner or representative. The local representative should be established, reputable, well-known, and respected in business circles, and knowledgeable about Costa Rican business culture and practices.

As noted earlier, the Gold Key Service (GKS) and the International Partner Search (IPS) are available through the Commercial Section at the U.S. Embassy in San Jose or through a U.S. Export Assistance Center. These options are an excellent economic strategy for identifying potential partners or representatives in Costa Rica. (See “Web Resources” at the conclusion of this chapter.)

The Costa Rican General Comptrollers Authority administers the Public Procurement law. The law establishes financial limits for determining the administrative procedures the Government entities or ministries must observe when issuing the necessary tenders for goods or services. Through the tender schedule, the government is attempting to avoid unnecessary delays in the bidding process and the payment of interest charges on undisbursed loans provided by international lenders. The system exempts tenders of certain amounts made by registered suppliers from the possibility of appealing to the Comptroller’s Office. The procuring entity must handle any complaints from bidders. Under CAFTA-DR, U.S companies will be given “national treatment” for most government procurement of goods and services. The agreement sets certain dollar thresholds for these procurements ($58,550 for national governments and $477,000 for “sub-central” governments). For more information, please see the United States Trade Representative’s CAFTA webpage.

Five important government entities follow the aforementioned guidelines: the Costa Rican Institute of Electricity (ICE), the Costa Rican Petroleum Refinery (RECOPE), the Costa Rican Institute of Social Security (CCSS), the National Insurance Institute (INS), and the Government’s National Procurement Department (Proveeduria Nacional). These entities are the most important Costa Rican Government buyers/contractors and have traditionally been the largest generators of public tenders in Costa Rica. Recently, the National Railway Institute has been included in these guidelines.

CS Costa Rica encourages U.S. manufacturers and exporters of goods and services to register their firms with the relevant Costa Rican Government institutions by contacting their procurement departments. More importantly, we recommend that U.S. companies interested in exporting to Costa Rica have contracts with a local representative who can lead the registration process with corresponding government entities. Registration will allow the procurement departments of government institutions to invite foreign firms to bid on tenders and to be considered for direct purchases.

Project Financing

Government institutions in Costa Rica obtain much of their project funding from multilateral development banks, such as the Inter-American Development Bank (IDB) and the World Bank (IBRD), and from the two banks’ equity investment affiliates, the Inter-American Investment Corporation (IIC) and International Finance Corporation (IFC). The Export-Import Bank of the United States (Ex-Im Bank), the Overseas Private Investment Corporation (OPIC) now transformed in the U.S. International Development Finance Corporation (DFC), and the World Bank’s Multilateral Investment Guarantee Agency (MIGA) are open for business in Costa Rica. Ex-Im Bank provides financing for the purchase of U.S. machinery, equipment and products and can be an important financing source for U.S. equipment used in major projects. DFC provides direct loans to smaller U.S. enterprises, loan guarantees for larger projects, equity investment funds to start or expand overseas investment projects involving U.S. participation, and political risk insurance to protect against currency inconvertibility, expropriation, and political violence. OPIC has finished transition to the U.S. International Development Finance Corporation (USDFC) as result of the BUILD act, consolidating the capabilities of OPIC and USAID to drive economic growth and support investment in developing countries. Costa Rica also has accessed financing from the government of the People’s Republic of China, having agreed to a more than $465 million loan to finance the construction of a 107 km highway in Limón Province, known as Ruta 32.

Government procurement and projects financed by the multilateral development banks usually require a public tendering process, pre-feasibility studies, and environmental impact assessments in accordance with Costa Rican law and the relevant bank’s regulations. Successful U.S. bidders usually have local representation to ensure compliance with strictly interpreted procedures. Disbursements of loans from the multilateral development banks to the Costa Rican Government are sometimes delayed by the requirement that the legislature ratify the loans, difficulties in obtaining local currency counterpart funds required by the banks, and prolonged administrative processes.

Multilateral Development Banks (World Bank, Inter-American Development Bank)

The Commercial Service maintains Commercial Liaison Offices in each of the main Multilateral Development Banks, including the World Bank and the Inter-American Development Bank. These institutions lend billions of dollars to developing countries for projects aimed at accelerating economic growth and social development by reducing poverty and inequality, improving health and education, and advancing infrastructure development. The Commercial Liaison Offices help American businesses learn how to get involved in bank-funded projects, and advocate on behalf of American bidders. Contacting Commercial Liaison Office to the Inter-American Development Bank or Commercial Liaison Office to the World Bank