When subcontractors must register in the Controlled Goods Program
Learn when subcontractors must register in the Controlled Goods Program (CGP) and explore different scenarios to help you decide whether registration is required.
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Definitions
Subcontractors are not officers, directors or employees of their client, that is, a CGP registered person. They undertake a contract to provide goods and/or services to CGP registrants, and may include (but are not limited to):
- cafeteria workers
- janitors
- landscapers
- trades, such as painters, plumbers, welders and electricians
- property maintenance staff
- security guards
- staffing agency referred personnel
Subcontractor registration requirements
A subcontractor must register in the Controlled Goods Program if they intend to examine, possess or transfer, that is, access, controlled goods (including associated controlled goods technical data) within Canada. A subcontractor is not an employee and therefore must not be security assessed by the client company. Subcontractor registration must be done prior to their accessing controlled goods, unless they are exempt or excluded from the program. This registration requirement is pursuant to the Defence Production Act (DPA) and Controlled Goods Regulations (CGR).
When subcontractors do not meet the CGP’s registration requirement, it is the CGP registrant’s responsibility to ensure that there is no unauthorized examination, possession or transfer of controlled goods during the contracted period.
CGP registrants should exercise due diligence and implement measures in their security plan to safeguard controlled goods from any unauthorized access. The security plan is subject to a CGP Inspector’s review and must be compliant with the DPA and CGR.
Scenarios
Explore different scenarios to help determine whether subcontractor registration in the CGP is required.
Scenario A
Your company intends to hire a subcontractor to provide janitorial services. Your company has controlled goods on-site and is registered in the CGP.
Question
Since the work will be conducted within the vicinity of controlled goods at your site, must the subcontractor register in the program?
Answer
The subcontractor providing janitorial services is not required to register since they do not intend to examine, possess or transfer controlled goods. However, your company is responsible for safeguarding the controlled goods on-site and ensuring that there is no unauthorized examination, possession or transfer. In addition, you must include measures in your security plan that identify and address any risks associated with a subcontractor’s presence at your worksite.
Scenario B
Your company intends to hire a subcontractor to manufacture, install, and/or perform related maintenance, repair, and overhaul (MRO) services on landing gears for military fighter jets.
Question
Since the subcontractor is working on a component of a controlled good, must they register in the program?
Answer
To manufacture the landing gear, the subcontractor is not required to register if:
- neither the technical data (such as blueprints or technical specifications) that you intend to provide, nor the landing gear itself, are deemed to be a controlled good
- the subcontractor does not intend to examine, possess or transfer any controlled goods
If the subcontractor will be working at your facility, your company is responsible for safeguarding the controlled goods on-site and ensuring that there is no unauthorized access. In addition, you must include measures in your security plan that identify and address any risks associated with a subcontractor’s presence at your worksite. However, if the subcontractor will be provided with controlled goods technical data to manufacture the landing gear for integration purposes, the subcontractor must register in the program.
To install and/or perform related MRO services for the landing gear on the military fighter jets, the subcontractor is required to register in the program if they intend to examine, possess or transfer controlled goods, that is, military fighter jets, during the course of their contract.
Scenario C
Your company intends to hire a security company to provide on-site security services at your facility. Your company has controlled goods on-site and is registered in the CGP.
Question
Is the security company required to register in the program?
Answer
The security company must register if their security staff intend to examine, possess or transfer controlled goods, including holding combinations and/or access cards/keys that enable the unhindered ability to access controlled goods.
The security company that is only responsible for guarding general site entrances and common areas, with no ability to access controlled goods, is not required to register in the program. Instead, your company is responsible for safeguarding the controlled goods on-site and ensuring that there is no unauthorized examination, possession or transfer. In addition, you must include measures in your security plan that identify and address any risks associated with a subcontractor’s presence at your worksite.
Scenario D
Your company is registered in the CGP and intends to contract aircraft mechanics through a staffing agency to provide maintenance services on controlled turbofan engines. The staffing agency supplies aircraft mechanics that are independent contractors and not employees of the agency. The staffing agency also provides their proof of security assessments to your company.
Question
Are the security assessments conducted by the Designated Official of the staffing agency considered valid by the CGP?
Answer
No, they are not. Although the staffing agency is registered in the program, these aircraft mechanics are not hired as their employees since the agency does not deduct income tax, employment insurance and pension benefits from their source income. Therefore, the aircraft mechanics must register in the CGP individually as independent contractors prior to accessing the controlled goods of your company. Their security assessments must be conducted by the CGP rather than the staffing agency’s Designated Official.
Scenario E
Your shipbuilding company enters into a contract with the Department of National Defence to perform repairs on a fleet of Royal Canadian Navy vessels. Your company intends to hire subcontracted welders to perform repairs and modifications to the exterior of the ship. Your company has controlled goods on-site and is registered in the CGP.
Question
As the welders will not be examining, possessing or transferring controlled goods, nor the associated controlled goods technical data (such as blueprints and drawings), are they required to register in the CGP?
Answer
Welders, or any other trades, who do not intend to examine, possess or transfer controlled goods, are not required to register. However, your company is responsible for safeguarding the controlled goods on-site and ensuring that there is no unauthorized examination, possession or transfer. In addition, you must include measures in your security plan that identify and address any risks associated with a subcontractor’s presence at your worksite.
Note: Your company is still obligated to meet all other contracting and subcontracting security requirements when undertaking government contracts. Please seek confirmation from your contracting authority that your company’s security requirements are sufficient for the contract.