Hypothetically, you have a company based in the Maritimes that has done extensive IT work for the four provinces on the east coast, as well as, let's say, for some states in the northeast of the U.S. They see a contract for the federal government that seems like a good fit, but based on this criteria, even though they've done IT work for other governments, they can't bid at all just because they don't have that federal government experience.
This seems like a system designed to protect insiders and exclude outsiders so that those insiders can charge higher prices and continue to get the same jobs over and over again regardless of quality.