Private Operator Exemption from Government Procurement Law

Puerto Rico Law Controversies

Private Operator Exemption from Government Procurement Law Shields Federally-Funded Public Housing Subcontract from Bidding Board Review

Prepared March 15, 2026

Court: Tribunal de Apelaciones de Puerto Rico

Date: February 24, 2026

Citation: Aeronet Wireless Broadband, LLC v. Junta de Subastas del Departamento de la Vivienda (Cost Control), 2026 WL 710268 (TCA)

Summary of Relevant Facts

The Administración de Vivienda Pública (AVP) entered into a Management Agent Services Agreement with Cost Control Company on October 30, 2020, under which Cost Control assumed responsibility for administering, operating, and maintaining designated public housing projects. Acting as AVP's managing agent, Cost Control published a public bidding notice on March 4, 2025, for community internet implementation work funded by federal funds. Cost Control issued a Formal Bidding Award Notification on June 16, 2025, adjudicating the contract to Neptuno Media Inc. Aeronet Wireless Broadband, LLC, which had submitted the lowest bid, challenged the adjudication on the grounds that: (1) it submitted the lowest offer; (2) the adjudication notice was defective in its description of remedies; and (3) the notice lacked complete information about selection criteria.

Procedural Background

On June 27, 2025, Aeronet filed an administrative review petition with the Junta Revisora de Subastas of the Administración de Servicios Generales (ASG). The Bidding Review Board issued a Resolution on August 21, 2025, dismissing Aeronet's petition for lack of jurisdiction, concluding that Law 73-2019 only applied to purchasing processes by governmental entities and exempt entities, not private entities conducting their own procurement. Aeronet sought judicial review.

Main Controversies

The central controversy was whether the ASG's Bidding Review Board had jurisdiction to review bidding challenges from a private operator managing public housing under a government contract. The case raised the threshold question of how to interpret the "operation and maintenance contract" exemption in Article 3 of Law 73-2019 (the General Services Administration Law for Centralization of Government Purchases). Specifically, the court had to determine whether the Management Agent Services Agreement between AVP and Cost Control qualified as an "operation and maintenance contract" that would exempt Cost Control's own procurement activities from Law 73-2019's requirements and the Bidding Review Board's oversight.

Position of the Parties

Aeronet argued that as the lowest bidder, it was entitled to administrative review of the procurement award and that Cost Control, acting on behalf of a government entity and using federal funds, should be subject to Law 73-2019's procurement requirements. Cost Control and the Bidding Review Board argued that Law 73-2019 explicitly exempts private operators with operation and maintenance contracts from its scope, and that the Board accordingly lacked jurisdiction over such procurement challenges.

Holding or Decision

The Tribunal de Apelaciones affirmed the Bidding Review Board's dismissal for lack of jurisdiction. The court held that Law 73-2019 explicitly exempts "any private operator with an Operation and Maintenance Contract with a Governmental Entity" from its application, and that the Management Agent Services Agreement between AVP and Cost Control constituted such a contract.

Reasons for the Decision

The court applied hermeneutic principles to interpret "operation and maintenance contract" according to the common and usual meaning of its essential components. The contractual obligations required Cost Control to administer, operate, and maintain public housing projects; provide decent, safe, and sanitary housing cost-effectively; manage ordinary maintenance and repairs; conduct inspections; and manage project utilities. These obligations placed the agreement squarely within the statutory definition. The court rejected the argument that Cost Control, as AVP's representative, should be treated as a governmental entity, finding instead that a private entity can hold an operation and maintenance contract for public facilities while remaining subject to the statutory exemption. This interpretation aligned with Law 73-2019's policy objectives of simplifying government purchasing while maintaining transparency. The decision raises significant questions about the accountability gap created when private operators managing public assets and spending federal funds are exempt from government procurement oversight.