DAOD 3003-2, Management, Security and Access Requirements Relating to Dual-Use 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: 2022-09-28

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 (données techniques contrôlées)

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)

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 Since its inception, the Controlled Goods Program has continued to evolve to reflect changes to statutes and regulations in both Canada and the U.S. A government review of export control regulations in the U.S. resulted in the transfer of many defence articles from the United States Munition List to the “500 and 600” series of the U.S. CCL of the Export Administration Regulations. Concurrently, Canada reviewed the schedule to the DPA, resulting in a reduction to the number of items listed as CGs under part 2 of the DPA. The items that have been removed from the schedule to the DPA are now categorized as DUGs, are still controlled for export under the Export and Import Permits Act and are listed on the ECL.

Note – In this DAOD, “defence article” refers to “defense article” as this term is defined in article 120.6 of the U.S. ITAR.

Purpose

4.3 The purpose of this DAOD is to provide direction on the management, security and access requirements relating to DUGs. It also provides direction on handling DUGs, irrespective of origin, including:

1. the management and safeguarding of DUGs from unauthorized access;
2. the outlining of the authorization criteria for access to DUGs;
3. the disposal of DUGs no longer required by the DND and the CAF;
4. security policies of the Government of Canada for DUGs, 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 DUGs.

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 their 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.

Planning

5.3 A CO or director with responsibilities relating to DUGs 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

5.4 The management, safeguarding and access requirements for DUGs must be considered during the entire MA&S process. The potential inclusion of a DUG in a given procurement process must therefore 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.

5.5 Foreign authorizations may be required when dealing with DUGs throughout MA&S process. The CTAT Office can advise on foreign authorizations.

5.6 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 DUGs 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 6.5 for applicable protective measures.

5.7 The business owner must catalogue DUGs in the CGCS or a similar system that is accessible by the CTAT Office. When notified of DUG 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 DUG by a bidder or vendor is included in solicitation and contract documentation, including the statement of requirements or statement of work as required.

DUGs of Foreign Origin

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

5.9 After any export control-related document is signed:

1. the business owner, working in collaboration with the procurement practitioner, must ensure that the signed original or a copy is kept on the equipment file; and
2. a copy must be sent to the CTAT Office within 30 days.

5.10 Before the re-export of any DUG of foreign origin to a person not listed in the original foreign export authorization, the CTAT Office must be contacted to determine:

1. the restrictions and conditions associated with the re-export authorization, if necessary; and
2. any requirement for obtaining specific foreign authorization.

DUG Identification

5.11 A DUG must be identified by a DMC in the CGCS or other pertinent materiel management system.

Disposal

5.12 The disposal of DUGs declared surplus may only occur by:

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

5.13 If the disposal of a DUG of foreign origin does not meet the restrictions and conditions of the original foreign export authorization, appropriate foreign authorization must be obtained before the transfer occurs. All re-export requirements must be reviewed by the CTAT Office before being submitted to a foreign government.

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

Destruction

5.15 The disposal of a DUG by destruction is mandatory unless the DUG can be transferred to an authorized person. A DUG must be destroyed in accordance with the instructions of the business owner.

6. Security

Marking and Identification

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

6.2 All DUG 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.

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

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

Protective Measures Table for DUGs

6.5 The Government of Canada must protect DUGs and provide or restrict their access. Accordingly, in order to ensure that only authorized persons have access to DUGs 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 DUGs:

Note - DUGs are unclassified. If a good is designated protected or classified, it is a CG, not a DUG.

7. Access

Access to DUGs

7.1 The DND and the CAF must perform a series of verifications prior to allowing access to a DUG outside of a DND or CAF facility, specifically, a DUG of foreign origin. See the CTAT Manual for additional information.

Access to DUGs within the DND and the CAF

7.2 All DND employees, CAF members, employees of OGDs and agencies working in the DND or the CAF, and embedded contractors working in a DND or CAF facility that have a need to know are qualified to access DUGs.

7.3 Prior to the granting of access to a DUG for persons other than those identified in paragraph 7.2, e.g. visitor or company, a senior officer or manager must ensure that any required foreign retransfer authorization is obtained (see paragraph 5.10).

Access to DUGs by a Person from a Foreign Country

7.4 Any request to provide access to a DUG 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 5.10.

Note – For DUGs under the ITAR or the Export Administration Regulations, U.S. bidders are exempt from this requirement.

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 the 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
• Directive on the Management of Materiel, Treasury Board
• Security Organization and Administration Standard, Treasury Board
• DAOD 3003-0, Controlled Technology and Access Transfer

Other References

• DAOD 3000-0, Materiel Acquisition and Support
• DAOD 3003-1, Management, Security and Access Requirements Relating to Controlled 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, Chapter 6.4, Loans
• C-01-008-000/MD-000, Generic Demilitarization Process – For Controlled Goods Recorded With a Demilitarization Code (DMC) of “D”
• 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)
• A Guide to Canada’s Export Controls, Global Affairs Canada
• IT Media Sanitization (ITSP.40.006), Canadian Centre for Cyber Security
• Defence Forms Catalogue
• DND Form 2586, Certificate of Destruction / Demilitarization
• Controlled Goods Management, ADM(Mat) intranet site

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)