The Conservative government is evaluating the relevancy of a decades-long policy meant to help veterans find work as security guards at government buildings.

Since the end of the Second World War, Ottawa has directed billions of dollars in federal guard contracts to the Commissionaires, a private, non-profit organization that was created to help employ the thousands of veterans returning from war.

Ottawa gives the Commissionaires the right of first refusal on all government guard contracts, an arrangement worth about $1.35-billion over five years when it was last renewed. But that deal is nearing its end. Federal briefing notes provided to Treasury Board President Tony Clement reveal the department's Internal Audit and Evaluation Bureau is reviewing the program to "examine the relevance and performance" of the arrangement.

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"This is a potentially sensitive subject as the [Right-of-First Refusal]'s purpose is to support veterans employment," states the memo, obtained by The Globe and Mail in an Access to Information Request. The undated memo is from briefing notes provided to the minister in the summer of 2013.

The Commissionaires insist they provide a high-quality service at a good price for taxpayers. They view the review as a routine matter and expect the arrangement to be renewed when it expires in 2015-16. But private sector guard companies are pushing for a change, and Mr. Clement's office is non-committal about renewing the deal.

The potential sensitivity is clear. The Conservative government has been under fire in the House of Commons for closing offices that serve veterans. Meanwhile, Mr. Clement is looking for ways to save money through greater privatization. The leading private sector competitor to the Commissionaires estimates Ottawa could save at least $100-million a year by opening the guard contracts to competition. Stephan Cretier, president of Montreal-based Garda World Security Corporation, said Ottawa could improve quality, reduce costs and still require private contractors to employ a set percentage of veterans.

Mr. Cretier said Ottawa's arrangement with the Commissionaires has been amended so many times the non-profit is now allowed to employ thousands of workers with no connection to Canadian military. The Commissionaires work force on federal contracts must be 60 per cent veterans – which can include former RCMP members – but it also provides guards to the private sector, which has no such requirement. Mr. Cretier estimates that, as a result, the number of veterans among Commissionaires employees is well below half.

"It's ridiculous," he said in an interview. "Canada is the only country in the world where a non-profit organization is the largest security provider, so it's just a question mark in terms of having a government that is free-market driven and you see a non-profit organization being the largest security provider."

John Dewar, CEO of the Commissionaires for Victoria, the Islands and Yukon, answered questions from The Globe on behalf of the national organization. He said taxpayers are getting a deal because of the not-for-profit nature of the organization.

"This is one way of supporting veterans that doesn't cost the government anything because we do all of the work under this right of first refusal at cost for the government," he said in an interview, playing down Ottawa's review as a "routine assessment."

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Before the federal government makes its decision, the Senate sub-committee on Veterans Affairs will weigh in. The sub-committee is wrapping up a study on services for veterans, including a review of Ottawa's relationship with the Commissionaires.

Conservative Senator David Wells, the sub-committee vice-chair, said he expects the committee's report will comment on the matter but that no decisions have been made on recommendations.

"Obviously, I'm a supporter of free enterprise, and any benefits that the government gives to individual companies should be looked at very carefully. That said, there's also that balance of doing as much as we can for veterans, and that's important," he said. "So I guess, as the government moves forward, that will be part of the deliberation and we'll hear from all sides on it and then, of course, we'll consider it internally ourselves."