Last week, the Government of Canada published an Order in Council amending the Canadian International Trade Tribunal Procurement Inquiry Regulations to clarify which bidders have access to Canada’s federal procurement challenge regime and to codify the limits on compensation that may be awarded by the Canadian International Trade Tribunal (“CITT”) to successful complainants who are not ultimately awarded the contract.
Under the current framework, Canada’s federal procurement challenge system is limited to Canadian suppliers and suppliers from countries with which Canada has an applicable government procurement agreement. This results stems primarily from the Supreme Court of Canda’s decision in Northrop Grumman Overseas Services Corp. v. Canada, wherein the Court determined that foreign bidders could not rely on the Agreement on Internal Trade (the predecessor agreement to the Canadian Free Trade Agreement) to challenge Canadian procurements open to “Canadian suppliers”. This decision has been applied by the CITT in subsequent cases to determine that only Canadian bidders and bidders covered by the procurement chapters of Canada’s trade agreements have standing in federal procurement disputes.
The recent amendments—scheduled to come into force on July 2—do not change this core principle, but rather clarify and codify it. Specifically, they reinforce that suppliers from countries without a trade agreement covering procurement with Canada are not entitled to bring complaints before the CITT. Based on the annex to the Order in Council, bidders from those countries with whom Canada has a trade agreement covering government procurement, including the United States, Mexico, and the European Union, will still be able to challenge federal procurements in Canada through the CITT. However, bidders from other countries such as China, India, Brazil, United Arab Emirates, Saudi Arabia, and South Africa with whom Canada does not have a trade agreement covering government procurement will not have access to Canada’s federal procurement challenge process.
The new amendments also codify the CITT’s recent practice when determining monetary compensation for bidders whose bids were unfairly rejected by the Government of Canada. Specifically, where the CITT does not recommend that the contract be awarded to the complainant, compensation for lost profit will now be capped at ten percent of the bidder’s bid price. In addition, bid preparation costs will be limited to two percent of the bid price. While the CITT has sometimes applied these figures when determining compensation, the amendments formalize them as legally binding caps, setting clear limits on the compensation that successful complainants can expect in procurement challenges before the CITT.
These changes reflect Canada’s targeted approach to procurement oversight, aligning access with Canada’s trade obligations while limiting exposure to challenges from non-partner countries. While the precise impact of the amendments will depend on how they are applied by the CITT, they underscore the growing importance of trade agreement coverage in determining access to remedies.
Cassidy Levy Kent is well positioned to advise companies navigating these changes. With deep expertise in international trade and procurement law, our team regularly represents clients in procurement challenges before the CITT and advises on complex procurement matters involving domestic and international obligations.