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


1. Introduction

Date of Issue: 2002-12-06

Date of Modification: 2011-08-23

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 Industry Relations, Analysis and Policy (DIRAP) – Controlled Technology Access and Transfer (CTAT) Office


2. Definitions

controlled goods (marchandises contrôlées)

Has the same meaning as in DAOD 3003-0, Controlled Goods.

controlled technical assistance (assistance technique contrôlée)

Has the same meaning as in DAOD 3003-0, Controlled Goods.

controlled technical data (documentation technique contrôlée)

Has the same meaning as in DAOD 3003-0, Controlled Goods.

controlled technology (technologie contrôlée)

Has the same meaning as in DAOD 3003-0, Controlled Goods.

demilitarization (démilitarisation)

Has the same meaning as in DAOD 3003-0, Controlled Goods.

embedded contractor (entrepreneur intégré)

Has the same meaning as in DAOD 3003-0, Controlled Goods.

materiel (matériels)

Has the same meaning as in subsection 2(1) of the National Defence Act.


3. Abbreviations

Table of Abbreviations

3.1 This DAOD contains the following abbreviations:

Abbreviation Complete Word or Phrase
ADM(Mat) Assistant Deputy Minister (Materiel)
CFSS Canadian Forces Supply System
CGA controlled goods advisor
CGCS Canadian Government Cataloguing System
CGD Controlled Goods Directorate
CO commanding officer
CTAT Controlled Technology Access and Transfer
DIRAP Director Industry Relations, Analysis and Policy
DMC demilitarization code
DPA Defence Production Act
DRMIS Defence Resource Management Information System
DSO departmental security officer
ISS Industrial Security Sector
IT information technology
ITAR International Traffic in Arms Regulations
L1 advisor level one advisor
OGD other government department
PA procurement authority
PWGSC Public Works and Government Services Canada
QAR quality assurance representative
TA technical authority

4. Overview

Purpose

4.1 The purpose of this DAOD is to provide instructions on how to:

  1. manage and safeguard controlled goods; and
  2. control the access to controlled goods in the inventory of the DND and the CAF, including:
    1. protecting controlled goods from unauthorized access;
    2. outlining who is authorized to have access to controlled goods and under what conditions; and
    3. providing guidance on how to dispose of controlled goods no longer required by the DND and the CAF.

Note – In this DAOD, "access" includes the examination, possession or transfer of controlled goods.

4.2 The vast majority of controlled goods in the DND and the CAF are unclassified. This DAOD applies to both unclassified and classified controlled goods. In addition to this DAOD, classified controlled goods are also subject to security policies of the Government of Canada and security policies and instructions of the DND and the CAF.

Consequences of Non-Compliance

4.3 Unauthorized access to controlled goods or any other failure by a DND employee or CAF member to comply with this DAOD may result in the taking of administrative or disciplinary action, or both.

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5. Management

Controlled Goods Advisor

5.1 An L1 advisor with responsibilities relating to controlled goods must appoint at least one person at the appropriate level as the CGA for their organization. The CGA must:

  1. act as a source of information on controlled goods and the requirements of this DAOD within their L1 advisor organization; and
  2. serve as a liaison between their organization and the CTAT Office.

5.2 Additional CGAs may be appointed at lower levels if required by location, roles or responsibilities.

5.3 Upon appointment, a CGA must contact the CTAT Office and register for training in order to fulfil their CGA duties.

Training

5.4 In order to provide DND employees, CAF members, embedded contractors and OGD officials working in DND and CAF facilities with the information they need to manage and safeguard controlled goods, the CTAT Office has established a series of e-learning modules that are available on the CTAT Office intranet site.

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

Planning

5.6 A manager or CO with responsibilities relating to controlled goods must address the instructions set out in this DAOD in the following documents:

  1. business plans;
  2. security plans;
  3. procurement plans; and
  4. disposal plans.

Procurement

5.7 The potential involvement of controlled goods in a procurement process must be determined as early as possible.

5.8 Potential bidders in a procurement process involving controlled goods need sufficient time to:

  1. seek registration with the PWGSC – CGD in the case of Canadian business enterprises; and
  2. obtain foreign authorization in the case of foreign business enterprises if their proposals contain controlled technology.

5.9 In addition, the PA may need to obtain foreign authorization if bidders are to be given access to any controlled goods of foreign origin in the possession of the DND and the CAF during the bidding process.

5.10 DND employees and CAF members involved in the bidding process must ensure that protective measures are put in place to provide for the return to the DND and the CAF, or the demilitarization, of all controlled goods transferred to an unsuccessful bidder during the bid solicitation process (see the Protective Measures Table for Unclassified Controlled Goods block for additional information in respect of unclassified controlled goods).

5.11 The applicable TA must ensure that new controlled goods of foreign origin are catalogued in the CGCS with the appropriate reference. For example, in the case of controlled goods of United States origin that are regulated by the ITAR, the reference should indicate whether they were exported under:

  1. ITAR Title 22 section 126.5, Canadian Exemptions;
  2. a foreign military sales case number;
  3. an export license number; or
  4. a technical assistance agreement number.

5.12 See the Responsibility Table block for additional responsibilities of the PA and TA in respect of the management of controlled goods during a procurement process.

Controlled Goods of Foreign Origin

5.13 Before signing any export control-related document for controlled goods of foreign origin, DND employees and CAF members must provide the CTAT Office with the document for review and approval.

5.14 After the document is signed:

  1. the signed original must be kept on the equipment file by the applicable PA; and
  2. a copy of the original must be sent to the CTAT Office.

5.15 Before transferring controlled goods of foreign origin to a person not listed in the original foreign export authorization, the CTAT Office must be contacted to determine:

  1. if a specific foreign authorization is required; and
  2. how to proceed with requesting authorization if necessary.

Note – Planning ahead is strongly recommended when considering the transfer of controlled goods of foreign origin as a foreign authorization may take several weeks or months to obtain.

Embedded Contractors

5.16 A manager or CO with responsibilities relating to controlled goods must ensure that any embedded contractor in their organization is only allowed access to controlled goods if the embedded contractor:

  1. is registered with the PWGSC – CGD;
  2. is a Canadian citizen; and
  3. maintains a Level II (Secret) clearance issued by the Government of Canada.

5.17 An embedded contractor is required to sign an acknowledgement letter setting out their obligations with respect to the handling and safeguarding of controlled goods, including obligations under this DAOD. A template for the letter may be found on the CTAT Office intranet site.

5.18 See the Access map for additional information.

Disposal

5.19 Controlled goods declared surplus by the DND and the CAF may only be disposed of by:

  1. transfer to an authorized person, in accordance with the DPA and other Canadian and foreign export control laws as applicable; or
  2. demilitarization.

5.20 See the DAOD 3013 series for additional information relating to the disposal of materiel declared surplus and the DAOD 3017 series for additional information relating to the transfer of materiel to OGDs.

5.21 If controlled goods of foreign origin are to be transferred to a third party not listed in the original foreign export authorization, the CTAT Office or the Director Supply Chain Operation – Disposal, Sales, Artefacts and Loans, as appropriate, must be contacted in order to obtain the appropriate foreign authorization.

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Demilitarization

5.22 All controlled goods of the DND and the CAF are identified by a DMC in the CGCS or other pertinent materiel management systems.

5.23 Controlled goods must be demilitarized in accordance with appropriate demilitarization instructions issued by the applicable TA. An authorized DND or CAF representative must supervise the conduct of the demilitarization and a copy of the certificate of demilitarization, and supporting documentation as appropriate, must be sent to the TA for retention for five years.

5.24 For accountability purposes, the authorized DND or CAF representative must be an individual with sufficient technical knowledge to determine whether or not the controlled goods have been demilitarized. The representative must be:

  1. a DND employee, CAF member, embedded contractor or OGD official working in DND and CAF facilities in a repair or disposal section who is specifically trained for this duty;
  2. a DND employee or CAF member qualified to repair or maintain the type of equipment to be demilitarized; or
  3. the applicable base technical inspector or QAR.

5.25 If controlled goods are to be demilitarized outside Canada and an authorized DND or CAF representative is not available, a qualified person (e.g. a QAR familiar with the controlled goods or type of technology) from another government, approved by the CTAT Office, must witness the demilitarization.

5.26 If not transferred to an authorized person, unclassified controlled technical data and any associated storage media must be demilitarized before disposal in accordance with the instructions provided in the Protective Measures Table for Unclassified Controlled Goods block.

5.27 Demilitarized controlled goods are no longer considered controlled goods in Canada and can generally be transferred to a Canadian citizen without the requirement of domestic or foreign authorizations.

Note – The Department of Foreign Affairs and International Trade may still require an export permit for demilitarized controlled goods intended for a foreign destination.

5.28 The CTAT Office may be contacted for further instruction on the demilitarization process.

Loss or Compromise of Controlled Goods

5.29 A manager or CO must ensure that a loss or compromise of controlled goods is reported within 48 hours of discovery to the CTAT Office using form DND 2585-E, Controlled Goods Loss or Compromise Reporting Form, available from the CTAT Office intranet site. This reporting requirement is in addition to the normal reporting requirements set out in applicable security policies and instructions of the DND and CAF. The CTAT Office must ensure that the loss or compromise is also reported to the DSO, as the delegated security authority for the management of security incidents in the DND and the CAF.

5.30 A manager or CO must take into consideration the following factors when deciding to conduct an investigation in respect of any loss or compromise of controlled goods:

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

5.31 If the loss or compromise of controlled goods is suspected to be the result of a security violation, security breach or criminal activity, the manager or CO must ensure that the incident is also reported to their local military police detachment.

5.32 If an investigation has not been conducted and the CTAT Office or the DSO considers that an investigation is required under the circumstances, the manager or CO must conduct an investigation without delay upon request.

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

  1. the results of the investigation;
  2. any corrective measures taken; and
  3. any administrative and disciplinary action taken.

5.34 Once an investigation has been completed, the controlled goods must be written off using form CF 152, Materiel Adjustment Report.

5.35 The CTAT Office is responsible, on behalf of the DND and the CAF, for all reporting requirements to agencies outside of the DND and the CAF.

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6. Security

Marking and Identification

6.1 The marking of controlled technical data and the identification of other controlled goods must be applied on entry into the inventory of the DND and the CAF.

6.2 The applicable TA must:

  1. ensure that the contractor from whom the controlled goods are acquired has properly notified the DND and the CAF about their nature;
  2. mark associated controlled technical data; and
  3. consult the CTAT Office to obtain identification authentication in the event the contractor has not:
    1. properly notified the DND and the CAF; and
    2. marked controlled technical data in accordance with the DND and the CAF marking instructions.

6.3 All controlled goods in the inventory of the DND and CAF must be properly identified as controlled goods within the CGCS, CFSS and DRMIS.

6.4 The TA must, if required, correct both the marking of controlled technical data and the identification of other controlled goods within their purview upon receipt of authentication by the CTAT Office.

6.5 The Publications Depot of the Director Supply Chain Operation must ensure that controlled technical data stored and entered in their repository systems is properly marked.

6.6 In the event of any dispute as to identification of controlled goods, the CTAT Office is the final authority for the identification.

6.7 The CTAT Office may be contacted for additional information on marking and identification.

Protective Measures Table for Unclassified Controlled Goods

6.8 DND employees and CAF members must observe the following protective measures to ensure that only authorized persons with a need to know have access to unclassified controlled goods:

In respect of ... the following protective measures must be applied:
physical storage,
  • store controlled goods which are unsupervised:
    • in an operations zone in any space which may be locked to deny unauthorized access, including, but not limited to, a desk drawer, file cabinet, office, storage locker or compound; or
    • openly in a security zone.
electronic storage,
  • store an electronic document which contains controlled technology in such a way that only authorized persons may have access; and
  • use information management systems or software that has the capability to identify and authenticate a person who requests access to the electronic document.
the demilitarization of controlled technical data in paper format,
  • completely destroy controlled technical data in paper format that is no longer required through the use of:
    • approved Type II destruction equipment as set out in the Security Equipment Guide of the Royal Canadian Mounted Police; or
    • a private destruction service which has at least a Level II (Secret) clearance through the PWGSC using such approved Type II destruction equipment.
the demilitarization of controlled goods,
  • contact the applicable TA to obtain demilitarization instructions.
the demilitarization of IT media,
  • demilitarize IT media which contains or has contained controlled technology in accordance with the instructions provided for secret level media in Clearing and Declassifying Electronic Data Storage Devices (ITSG-06).
electronic transmission,
  • transmit controlled technology to an authorized person using a telephone, fax machine, email, database or local area network, provided the transmission is properly identified as containing controlled technology to provide awareness to the person of the associated obligations.
physical transmission,
  • treat physical transmission (e.g. mail or courier) of controlled technology in accordance with the requirements for Protected A material as described in Appendix C of the Treasury Board Operational Security Standard on Physical Security.
transporting,
  • transport controlled technology in accordance with the requirements for Protected A material as described in Appendix C of the Treasury Board Operational Security Standard on Physical Security.

Physical Transmission and Transportation

6.9 DND employees and CAF members must ensure that if controlled goods are physically transmitted or transported:

  1. the controlled goods are packaged in such a way that prevents their examination by any person other than the recipient, and in a way that the recipient can easily detect if tampering of the controlled goods has occurred; and
  2. the recipient of controlled goods is authorized to receive the controlled goods.

7. Access

Access to Controlled Goods Within the DND and the CF

7.1 A manager or CO must ensure that any DND employee, CAF member, embedded contractor or OGD official working in a DND and CAF facility who requires access to controlled technology or the examination of other controlled goods:

  1. is a Canadian citizen; and
  2. maintains a Level II (Secret) clearance issued by the Government of Canada.

7.2 The CTAT Office may grant a waiver on a case-by-case basis for non-Canadians.

7.3 In addition, the manager or CO must ensure that an embedded contractor is registered with the PWGSC – CGD in accordance with the Controlled Goods Regulations.

7.4 Operation of a controlled good or access to operator-level documents does not constitute access to controlled technology or examination of controlled goods. A CAF member who operates controlled goods (e.g. a driver, gunner or infantry soldier) is therefore not required to meet these conditions to access the controlled goods the CAF member operates.

Identification Badge

7.5 A manager or CO with responsibilities relating to controlled goods must ensure that DND employees, CAF members, embedded contractors and OGD officials working in DND and CAF facilities with a need to access controlled technology, or examine other controlled goods, wear or produce a badge clearly identifying that they have the authorization to do so.

7.6 As a minimum, an identification badge must show:

  1. a picture of the DND employee, CAF member or embedded contractor; and
  2. a marker indicating that the person is authorized to access controlled technology or examine other controlled goods.

7.7 It is the responsibility of the formation commander to implement and maintain this badging system.

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

Access to Controlled Goods Within Canada

7.9 In order to access controlled goods in Canada, a person has to be registered with the PWGSC – CGD unless:

  1. excluded from registration, for example, the person occupies a position in the federal public administration, including a position in a federal Crown corporation, or is employed by Her Majesty in right of a province, and acts in good faith in the course of their duties and employment (see section 36 of the DPA); or
  2. exempted from registration (see sections 16 to 25 of the Controlled Goods Regulations).

Note – This is in addition to the requirements set out in the Controlled Goods of Foreign Origin block, if applicable.

Access by a Person From a Foreign Country

7.10 Any request to provide access to controlled goods to a person from a foreign country, other than the United States, must be sent to the PWGSC – ISS for the conduct of a review of the request.

Note – This is in addition to the requirements set out in the Controlled Goods of Foreign Origin block, if applicable.

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8. Responsibilities

Responsibility Table

8.1 The following table identifies responsibilities associated with this DAOD:

The ... is or are responsible for ...
ADM(Mat)
  • developing materiel acquisition and support instructions for controlled goods.
L1 advisors
  • promulgating the necessary plans, procedures and instructions to ensure compliance by DND employees, CAF members, embedded contractors and OGD officials working in DND and CAF facilities in their organization with:
    • the DPA, the Controlled Goods Regulations, the ITAR and applicable regulations of other countries;
    • this DAOD; and
    • other applicable DND and CAF instructions on management, security and access to controlled goods.
DSO
  • developing and issuing security policies for controlled goods;
  • ensuring oversight and compliance of security requirements relating to controlled goods; and
  • investigating the loss or compromise of controlled goods, if necessary.
Canadian Forces Provost Marshal
  • issuing military police policies regarding the investigation of the loss or compromise of controlled goods; and
  • issuing policies and providing technical advice regarding the physical security of controlled goods.
CTAT Office
  • providing DND employees, CAF members, embedded contractors and OGD officials working in DND and CAF facilities with expert advice, support, training and assistance on management, security and access relating to controlled goods;
  • reviewing and approving all draft export control-related documents (e.g. end-user certificates, export licenses and technical or manufacturing license agreements);
  • conducting compliance activities to ensure that organizations and units are treating controlled goods in accordance with this DAOD;
  • reporting compliance issues to the ADM(Mat) or, as applicable, the Vice Chief of the Defence Staff or other responsible L1 advisor, for remedial action; and
  • reporting, on behalf of the DND and the CAF, significant cases of loss or compromise of controlled goods to the PWGSC – CGD and, as required, to foreign governments.
managers and COs
  • ensuring that DND employees, CAF members, embedded contractors and OGD officials working in DND and CAF facilities:
    • complete applicable training on controlled goods; and
    • only have access to controlled technology or examine other controlled goods in accordance with this DAOD;
  • ensuring all DND and CAF positions that require access to controlled technology or the examination of other controlled goods are identified as requiring Canadian citizenship and a Level II (Secret) clearance;
  • ensuring no export-control related document is executed before review and approval by the CTAT Office; and
  • ensuring controlled goods under their responsibility are handled in accordance with this DAOD.
CGAs
  • acting as:
    • the office of primary interest of their organization or unit for controlled goods; and
    • the liaison between their group, command, division or unit and the CTAT Office for all questions relating to compliance with this DAOD and all other issues relating to controlled goods.
TA
  • identifying to the PA any controlled goods involved in a procurement process;
  • ensuring controlled goods are identified (with appropriate justification to support the DMC assignment) in the CGCS, CFSS and DRMIS;
  • ensuring that all controlled technical data in hardcopy and electronic format are marked accordingly;
  • developing or, as applicable, approving demilitarization instructions; and
  • retaining certification of demilitarization.
PA
  • consulting the CTAT Office as soon as possible if a procurement process involves controlled goods;
  • ensuring the applicable requirements of this DAOD are addressed in all procurement process documents;
  • informing the PWGSC of any involvement of controlled goods, typically on the security requirements check list and the requisition package;
  • ensuring the appropriate standard acquisition clauses and conditions or other appropriate statements are included in all procurement process documents relating to controlled goods;
  • ensuring all Canadian bidders are registered with the PWGSC – CGD;
  • ensuring all foreign bidders are registered with the United States Department of State or vetted by the PWGSC – ISS;
  • ensuring that the applicable foreign authorization is obtained prior to bidders receiving access to any controlled goods of foreign origin during a procurement process; and
  • forwarding, to the CTAT Office for review and approval, all export control-related documents (e.g. end-user certificates, export licenses and technical or manufacturing license agreements) prior to their execution, and maintaining the originals of these documents on the equipment file.
DND employees and CAF members
  • complying with this DAOD;
  • completing applicable training on controlled goods; and
  • reporting any suspected loss or compromise of controlled goods.

9. References

Acts, Regulations, Central Agency Policies and Policy DAOD

Other References

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