DND poor at screening private contractors, watchdog finds

The federal government is not as stringent as it should be when it comes to handing over its secrets to private contractors, says the auditor general.

In a wide-ranging report issued Tuesday, Sheila Fraser said she doesn't think sensitive foreign material from allies is at risk,but her findings are likely to sound alarms in the United States, where defence officials have long complained about what they see as poor security procedures in Canadian companies seeking lucrative military contracts.

'We found serious problems in the system that is supposed to ensure the security of government information and assets entrusted to industry.' —Auditor General Sheila Fraser

In her latest report, Fraser said government security procedures aren't up to snuff, especially when it comes to major defence construction projects.

"We found serious problems in the system that is supposed to ensure the security of government information and assets entrusted to industry," she said.

Among other things, Fraser found:

• Some government officials aren't sure of their responsibilities when it comes to sensitive or secret information.
• Many contracts have gone to companies whose people and facilities don't have the required security clearances.
• The industrial security program in Public Works— the main agency for government contracts— is hamstrung by lack of money.

In reviewing Public Works files, Fraser's watchdogs found 24 sensitive contracts were awarded before the contractors were cleared to the proper security level. Two-thirds of those contracts dealt with information deemed secret or above.

All the contractors eventually got security clearances, the report said, but the contracts were awarded an average of 11 months before the clearances were complete.

Fraser pointed out that the Public Works industrial security programrelies on temporary funding and has trouble recruiting full-time staff because it lacks a stable, long-term budget.

A quarter of its positions are vacant and almost one-third are filled by temporary staff.

"It's clear funding has been insufficient," said Fraser, who normally avoids commenting on funding issues.

Policiesinterpreted differently

Overall, she said, the security program's contracting policies are ambiguous, with different departments interpreting them differently.

At the Department of National Defence, she said security rules have not been updated to standards set by Treasury Board over the last five years.

For example, she said, Treasury Board says people with regular access to federal information or buildings should meet a minimum security standard, but defence policies don't reflect that.

Defence officials say it's expensive and cumbersome to try to incorporate security measures into construction projects.Nevertheless, they told Fraser the policies are under revision and should be up to date by next month.

Fraser chastisedNational Defence in an earlier report because it gave unscreened workers access to the plans and construction site of what was supposed to be a high-security Norad building in North, Bay, Ont.

After a year of work, National Defencehas decided the building can be used with modifications. However, the department didn't say how much the blunder cost in time and money.