DAOD 3003-1, Management, Security and Access Requirements Relating to Controlled Goods

Table of Contents

1. Introduction
2. Definitions
3. Abbreviations
4. Overview
5. Management
6. Security
7. Access
8. Compliance and Consequences
9. Responsibilities
10. References

1. Introduction

Date of Issue: 2002-12-06

Date of Modification: 2023-12-14

Application: This DAOD is a directive that applies to employees of the Department of National Defence (DND employees) and an order that applies to officers and non-commissioned members of the Canadian Armed Forces (CAF members).

Approval Authority: Assistant Deputy Minister (Materiel) (ADM(Mat))

Enquiries: Director General International and Industry Programs (DGIIP) – Controlled Technology Access and Transfer (CTAT) Office

2. Definitions

access (accès)

In respect of a controlled good or dual-use good, the ability to examine, possess or transfer the good.

Note – In this definition:

• a) “examine” means to consider a good in detail or to subject it to analysis, in order to discover its essential features or meaning;
• b) “possess” means the actual physical possession or custody of the good, or its constructive possession, i.e. the ability to exercise control over the good at any given time either directly or through a third party; and
• c) “transfer” means to dispose of a good or disclose its content in any manner. (Defence Terminology Bank record number 696451)

controlled good (marchandise contrôlée)

A good referred to in the schedule to the Defence Production Act. (Based on section 35 of the Defence Production Act)

Note – Controlled goods include munitions, missile technology, as well as technical data and items that have military significance. (Defence Terminology Bank record number 48276)

controlled technical data (donnée technique contrôlée)

In relation to controlled goods and dual-use goods, technical data necessary for their design, development, production, manufacture, assembly, modification, repair, maintenance, testing, operation or use. (Defence Terminology Bank record number 696452)

controlled technology (technologie contrôlée)

In relation to controlled goods and dual-use goods, technical assistance and service associated with their design, development, production, manufacture, assembly, modification, repair, maintenance, testing, operation or use. (Defence Terminology Bank record number 696525)

destruction (destruction)

The act of rendering an item beyond repair, non-restorable or unusable for its intended purpose. (Defence Terminology Bank record number 696453)

dual-use good (marchandise à double usage)

A product or technology that has both civilian and military applications and that is subject to Canadian and/or foreign export regulations. (Defence Terminology Bank record number 696454)

full demilitarization (démilitarisation complète)

An action to permanently and irreversibly preclude the repair, restoration or reverse engineering of a controlled good.

Note – All information on the characteristics, performance or manufacturing of the good is also removed. (Defence Terminology Bank record number 696457)

retransfer (retransfert)

The permanent or temporary transfer of a controlled good or dual-use good to a previously unauthorized end-user or destination or for a previously unauthorized end use. (Defence Terminology Bank record number 696456)

technical authority (autorité technique)

The person who has the authority to set technical specifications and standards, manage configurations, provide technical advice and monitor compliance within their area of responsibility. (Defence Terminology Bank record number 43437)

3. Abbreviations

4. Overview

Interpretation

4.1 In this DAOD:

1. ”business owner” refers to a life cycle materiel manager or a technical authority; and
2. “procurement practitioner” refers to a procurement authority or a contracting authority.

Context

4.2 In order to access a CG in Canada, a person or company must be:

1. registered with the CGP, in accordance with section 38 of the DPA;
2. exempt from registration, in accordance with section 39 of the DPA; or
3. authorized by the country of origin.

4.3 The registration requirements do not apply to persons who act in good faith in the course of their duties and employment and:

1. occupy a position in the federal public administration, including a position in a federal Crown Corporation; or
2. are employed by His Majesty in right of a province.

Purpose

4.4 The purpose of this DAOD is to provide direction on the management, security and access requirements relating to CGs. It also provides direction on controlling access to the DND and CAF inventory of CGs, including:

1. the management and safeguarding of CGs from unauthorized access;
2. the outlining of the authorization criteria for access to CGs;
3. the disposal of CGs no longer required by the DND and the CAF;
4. security policies of the Government of Canada for CGs, including directives applicable to private sector suppliers under contract with the DND and the CAF; and
5. DND and CAF security policies and instructions for CGs.

4.5 This DAOD applies to unclassified, protected and classified CGs. In addition to this DAOD, specific CGs may also be subject to regulations and policies of the Government of Canada.

5. Management

CTAT Advisor

5.1 An L1 or L2 with responsibilities relating to CGs and DUGs must appoint at least one person at the appropriate level as the CTAT advisor for their organization. The CTAT advisor must:

1. have a thorough knowledge of the organization’s mandate, roles, responsibilities and operations;
2. have the support of, and access to, senior management;
3. have a level of expertise that enables the individual to act as a source of information on the requirements of the DAOD 3003 series in their L1 or L2 organization; and
4. attend CTAT advisor-focused training provided by CTAT Office.

5.2 Additional CTAT advisors may be appointed within an L1 organization at lower levels if required by location, roles or responsibilities.

Mandatory Training

5.3 CTAT awareness training is available through the Defence Learning Network for the management and safeguarding of CGs and is mandatory for:

1. DND employees and CAF members;
2. employees of OGDs and agencies working in the DND or the CAF; and
3. embedded contractors working in a DND or CAF facility.

5.4 The CTAT Office may be contacted for additional information on training.

Planning

5.5 A CO or director with responsibilities with respect to allowing access to CGs must address the requirements set out in this DAOD in the following documents:

1. business plans;
2. security plans;
3. procurement plans;
4. project plans;
5. in-service support plans; and
6. disposal plans.

Procurement

5.6 The management, safeguarding and access requirements for CGs must be considered during the entire MA&S process. The potential inclusion of a CG in a given procurement process must be determined by the business owner or their technical representative as early as possible to ensure that appropriate actions are taken to avoid export control-related delays or issues during the procurement process.

5.7 When CGs are included in a procurement, contract security clauses for CGs, including CGs of foreign origin, must be added by a procurement practitioner as part of the procurement process to address the examination, possession or transfer of CGs to unauthorized third parties and/or when DND is the contracting authority.

5.8 As applicable, potential bidders or proponents in a procurement process involving CGs need sufficient time to:

1. seek registration with the PSPC ISS – CGP;
2. obtain the appropriate security clearances or validation from the PSPC ISS contract security program; and
3. obtain the needed authorization from the relevant foreign authorities, if commercial suppliers are to be given access to DND-owned CGs of foreign origin as part of a bid or proposal.

5.9 Foreign authorization may be required when dealing with CGs throughout the MA&S process. The CTAT Office can advise on seeking foreign authorizations.

5.10 DND employees and CAF members involved in a procurement process must ensure that protective measures are put in place to provide for the return to the DND and the CAF, or full demilitarization, of all CGs transferred to both the winning bidder and any unsuccessful bidder, including sub-contractors, as applicable. Appropriate measures must be set out in the solicitation and contract documentation, as applicable. See the table in paragraph 6.12 for applicable protective measures.

5.11 In the case of potential foreign bidders requiring access to CGs owned by the DND and the CAF, the procurement practitioner must consult with PSPC ISS to validate the requisite security clearance of the foreign bidders.

Note – For CGs under the U.S. ITAR, U.S. bidders are exempt from this requirement.

5.12 The business owner, working in collaboration with the procurement practitioner, must ensure that the following documents, as applicable, are recorded and made available to the CTAT Office:

1. any end-user certificate or end-user assurance;
2. any license exemption under ITAR Title 22 Section 126.5, Canadian exemptions;
3. any Foreign Military Sales case, also referred to as a letter of acceptance;
4. any export license; and
5. any technical assistance agreement.

5.13 The business owner must catalogue CGs in the CGCS or a similar system that is accessible by the CTAT Office. When notified of CG requirements by the business owner or their representative, DND employees and CAF members involved in the procurement process must ensure appropriate direction and information relating to the return, disposal or demilitarization of any CGs by a bidder or vendor is included in solicitation and contract documentation, including the statement of requirements or statement of work as required.

CGs of Foreign Origin

5.14 Before signing any export control-related document for a CG of foreign origin, DND employees and CAF members must provide the CTAT Office with the document for review and comments.

5.15 After any export control-related document is signed:

1. the applicable business owner must ensure that the signed original is to be kept on the equipment file; and
2. a copy must be sent to the CTAT Office within 30 days.

5.16 Before the transfer or retransfer of any CG of foreign origin to a person or company not listed in the original foreign export authorization, the CTAT Office must be contacted to determine:

1. the process for requesting transfer or retransfer authorization, if necessary; and
2. any requirement for obtaining specific foreign authorization, which may take months to obtain upon submission of a formal request, making planning ahead essential.

CG Identification

5.17 All CG must have a NATO stock number. A CG must be identified by a DMC in the CGCS or other pertinent materiel management system.

Disposal

5.18 The disposal of CGs may only occur by:

1. retransfer to an authorized person, in accordance with the DPA and other Canadian and foreign export control statutes and regulations, as applicable; or
2. full demilitarization in accordance with C-02-007-000/AG-001, Controlled Technology Access and Transfer (CTAT) Manual.

5.19 If disposal of a CG of foreign origin is to occur by retransfer to a third party not listed in the original foreign export authorization, the appropriate foreign authorization must be obtained before the retransfer occurs. All retransfer authorization requests must be reviewed by the CTAT Office before being submitted to a foreign government.

5.20 DAOD 3013-0, Disposal of Materiel, provides additional information relating to the disposal of CGs declared as surplus materiel, and the DAOD 3017 series provides additional information relating to the transfer or retransfer of CGs to OGDs.

Demilitarization Process

5.21 Full demilitarization of a CG must be completed in accordance with the CTAT Manual.

5.22 For accountability purposes, an authorized DND or CAF representative may be required to supervise the full demilitarization of a CG, including the submission of form DND 2586, Certificate of Destruction/Demilitarization, to the business owner. An authorized DND or CAF representative is not required when the individual or company performing the full demilitarization is authorized to access CGs.

5.23 An authorized DND or CAF representative is an individual with sufficient technical knowledge to determine whether or not full demilitarization of a CG has been completed. Sufficient technical knowledge can generally be acquired when:

1. the DND employee, CAF member, employee of an OGD or agency working within the DND or the CAF, or embedded contractor working in a DND or CAF facility, works in a repair or disposal section and has been specifically trained for the full demilitarization of the CG; or
2. the DND employee or CAF member is:
   1. a person qualified to repair or maintain the CG;
   2. a base technical inspector or a quality assurance representative; or
   3. a senior technical inspector or specialist as described in C-02-005-009/AM-000, Maintenance Policy, Inspection and Conditioning of Materiel Returned to and Held in Supply System.

5.24 Once the full demilitarization of a CG has been completed, it is no longer considered to be a CG in Canada. However, Global Affairs Canada may still require an export permit in such a case for a foreign destination.

5.25 The CTAT Office has to be contacted to confirm the applicable retransfer process and further instructions on the full demilitarization process or for any partial demilitarization.

Embedded Contractors

5.26 A CO or director with responsibilities relating to CGs must ensure that any embedded contractor working in a DND or CAF facility in their organization is only allowed access to CGs if the contractor:

1. has a need to know;
2. is registered with the PSPC – CGP, or is an employee of a registered company;
3. maintains a secret security clearance level, issued by the Government of Canada;
4. works under the direction and control of the DND and/or CAF; and
5. works at a DND or CAF facility.

5.27 The embedded contractor and the responsible CO or director must sign an “Embedded Contractor Acknowledgement Letter” setting out their obligations with respect to the management and safeguarding of CGs, including obligations under this DAOD. Additionally, the responsible CO or director must sign an “Embedded Contractor’s Commanding Officer/Director Acknowledgement Letter”, outlining the criteria for a contractor to be considered embedded. The template for the letters may be found in the CTAT Manual.

5.28 If the individual does not meet the criteria for an embedded contractor, the CO/Director would ideally contact the CTAT office prior to hiring the contractor to discuss possible courses of action. Most likely, the CTAT office would need to obtain approval from the country of origin of the equipment.

6. Security

Loss or Compromise of CGs

6.1 All DND employees and CAF members must ensure that any loss or compromise of a CG is reported to the CTAT Office using the online Controlled Goods Loss or Compromise Reporting Form available on the CTAT website, within 48 hours of the discovery of the loss or compromise.

6.2 Reporting requirements for CGs are in addition to any other reporting requirements set out in DND and CAF policies, instructions and directives. As per NDSOD Chapter 12, Security Incident Management, loss or compromise must also be reported to DGDS as the delegated security authority for the management of security incidents in the DND and the CAF.

6.3 A CO or director must also take into consideration the following factors when deciding to conduct an investigation with respect to any loss or compromise of a CG:

1. suspicion of any negligence or wrongdoing;
2. potential danger to public safety;
3. value of the CG;
4. quantity;
5. military or international political sensitivity of the CG; and
6. frequency of other reports of loss or compromise of related CGs.

6.4 If the loss or compromise of a CG is suspected to be the result of a security violation, security breach or criminal activity, the CO or director must ensure that the incident is also reported to the local military police.

6.5 If an investigation has not been conducted and the CTAT Office or the DGDS considers that an investigation is warranted, the CO or director must conduct an investigation upon request.

6.6 The CO or director must inform the CTAT Office within 30 days of completion of any investigation of:

1. the results of the investigation; and
2. any corrective measures taken.

6.7 The CTAT Office is responsible, on behalf of the DND and the CAF, for all reporting requirements for the loss or compromise of CGs to agencies outside of the DND and the CAF, as well as to foreign governments.

Marking and Identification

6.8 The identification and marking of CGs, as outlined in the CTAT Manual, must be completed upon their acceptance into the DND and CAF inventory.

6.9 All technical data that is held in the DND and CAF inventory must be properly marked and stamped in accordance with the CTAT Manual, based on the applicable highest designation, in accordance with the NDSOD Chapter 6, Security of Information.

6.10 In the event that the identification of a CG is contested, the CTAT Office serves as the final authority.

6.11 The CTAT Office may be contacted for additional information on the marking and identification of CGs.

Protective Measures Table for CGs

6.12 The Government of Canada must protect CGs and provide or restrict their access. Accordingly, in order to ensure that only authorized persons have access to CGs and associated controlled technology in the DND and CAF inventory, the protective measures in the following table must be applied, as a minimum, for all protected or classified CGs:

7. Access

Access to CGs in Canada

7.1 In order to access a CG in Canada, a Canadian person or company has to be registered with the Government of Canada CGP unless that person or company is:

1. excluded from registration, such as a DND employee or CAF member, under section 36 of the DPA; or
2. exempted from registration in accordance with sections 16 to 21 of the Controlled Goods Regulations.

Access to CGs within the DND and the CAF

7.2 A CO or director must ensure that any DND employee, CAF member, employee of an OGD or agency working in the DND or the CAF, or embedded contractor working in a DND or CAF facility, maintains the appropriate security clearance if required to examine, possess or transfer a CG. Specifically, personnel require a secret security clearance for access to controlled technical data for the purposes of its examination.

7.3 For operation of a CG, or access to operator-level documents that are identified with the Controlled Technical Data Stamp No.2 (see the CTAT Manual) inside of the DND or the CAF, the right to access this documentation is not restricted. Accordingly, a CAF member who operates a CG, e.g. a driver, gunner or infantry soldier, is therefore not required to meet the conditions set out in paragraph 7.2 to access the CG. However, those documents remain CGs and must be treated as such.

7.4 Prior to the granting of access to a CG for persons other than those identified in paragraphs 7.2 and 7.3, e.g. a visitor or company, a senior officer or manager must ensure that any required foreign retransfer authorization is obtained (see paragraph 5.16).

Access to CGs by a Person from a Foreign Country

7.5 Any request to provide access to a CG to a person from a foreign country must be sent to the CTAT Office by the procurement practitioner. This is in addition to the requirements set out in paragraph 5.16.

Note - For CGs under the ITAR, U.S. bidders are exempt from this requirement.

Identification Badge

7.6 A senior officer or manager with responsibilities relating to CGs must ensure that DND employees, CAF members, employees of OGDs and agencies working within the DND or the CAF, and embedded contractors working in a DND or CAF facility, with a need to access controlled technology or examine other CGs, wear or produce a badge clearly identifying that they have the authorization to do so.

7.7 As a minimum, an identification badge must show:

1. a picture of the DND employee, CAF member, employee of an OGD or agency, or embedded contractor working in a DND or CAF facility; and
2. a marker indicating that the person is authorized to access controlled technology or examine other CGs.

7.8 COs and directors must implement and maintain this badging system.

7.9 The CTAT Office can provide advice on badging requirements and alternative badging systems.

8. Compliance and Consequences

Compliance

8.1 DND employees and CAF members must comply with this DAOD. Should clarification of the policies or instructions set out in this DAOD be required, DND employees and CAF members may seek direction through their channel of communication or chain of command, as appropriate. Managers and military supervisors have the primary responsibility for and means of ensuring the compliance of their DND employees and CAF members, and embedded contractors working in a DND or CAF facility, with this DAOD.

Consequences of Non-Compliance

8.2 DND employees and CAF members are accountable to their respective managers and military supervisors for any failure to comply with the direction set out in this DAOD. Non-compliance with this DAOD may result in administrative action, including the imposition of disciplinary measures, for a DND employee, and administrative or disciplinary action, or both, for a CAF member. Non-compliance may also result in the imposition of liability on the part of Her Majesty in right of Canada, DND employees and CAF members.

Note – In respect to the compliance of DND employees, see the Treasury Board Framework for the Management of Compliance for additional information.

9. Responsibilities

Responsibility Table

9.1 The following table identifies responsibilities associated with this DAOD:

10. References

Acts, Regulations, Central Agency Policies and Policy DAOD

• Criminal Code
• Defence Production Act
• Export and Import Permits Act
• Security of Information Act
• Security Offences Act
• Controlled Goods Regulations
• Export Control List
• Framework for the Management of Compliance, Treasury Board
• Policy on Government Security, Treasury Board
• Controlled Goods Directive, Treasury Board
• Directive on the Management of Materiel, Treasury Board
• Directive on Security Management, Treasury Board
• Security Organization and Administration Standard, Treasury Board
• DAOD 1000-8, Policy Framework for Safety and Security Management
• DAOD 3003-0, Controlled Technology and Access Transfer

Other References

• DAOD 3000-0, Materiel Acquisition and Support
• DAOD 3003-2, Management, Security and Access Requirements Relating to Dual-Use Goods
• DAOD 3013-0, Disposal of Materiel
• DAOD 3017-0, Transfer of Materiel to Other Government Departments
• DAOD 3017-1, Management of the Transfer of Materiel to Other Government Departments
• A-LM-007-100/AG-001, Supply Administration Manual
• C-01-008-000/MD-000, Generic Demilitarization Process – For Controlled Goods Recorded With a Demilitarization Code (DMC) of “D”
• C-02-005-009/AM-000, Maintenance Policy, Inspection and Conditioning of Materiel Returned to And Held in the Supply System
• C-02-007-000/AG-001, Controlled Technology Access and Transfer (CTAT) Manual
• National Defence Security Orders and Directives
• Exchange of Letters (May 2007) between the Deputy Minister of the DND and the Deputy Secretary of State of the United States concerning the transfer, access and control of controlled defence articles and services under the International Traffic in Arms Regulations of the United States (available in English only)
• Export and import controls, Global Affairs Canada
• IT Media Sanitization (ITSP.40.006), Canadian Centre for Cyber Security
• Defence Forms Catalogue
• Form DND 2586, Certificate of Destruction / Demilitarization
• Controlled Goods Loss or Compromise Reporting Form, CTAT website
• Controlled Goods Management, ADM(Mat) intranet site
• Security requirements for contracting with the Government of Canada, PSPC website

U.S. References

• The International Traffic in Arms Regulation, U.S. Department of State (available in English only)
• Commerce Control List, U.S. Department of Commerce (available in English only)
• The United States Munitions List, Electronic Code of Federal Regulations (available in English only)