The federal government is willing to accept the privacy and security risks of storing data in the internet cloud as an alternative to its own aging computers that are "at risk of breaking down," says an internal policy paper.

The federal paper on "data sovereignty," obtained through the Access to Information Act, fleshes out the government's plan to embrace the cloud as a solution to its file management woes.

Privately run cloud companies provide customers, such as federal departments, with virtual computer services — from email systems to vast storage capacity — using software, servers and other hardware hosted on the company's premises.

The government sees the cloud as a way to meet the needs of Canadians in an era of increasing demand for online services.

However, the paper says, "a number of concerns" related to data control, protection and privacy have been raised within the government, including:

Storage of sensitive information — designated "Protected B" or higher — outside the country, creating a risk that access might be restricted or denied due to a contractual dispute with a company or a disagreement with the host government;

Handoff of certain security responsibilities to the cloud service provider;

The possibility that courts could compel foreign-owned cloud service providers to turn over Canadian data to their governments.

Many countries, including Canada, have laws allowing them to subpoena or obtain a warrant for information from private organizations to support legal investigations, the paper notes.

Legal obligations to protect data

The U.S. Patriot Act, passed following the 2001 terrorist attacks in New York and Washington, gave the Federal Bureau of Investigation broader access to records held by firms in the United States, including data on Canadians.

In addition, there are long-standing information-sharing agreements and a legal assistance process between security and law-enforcement agencies in both countries — "the most likely vehicles for obtaining access to information held in Canada," the policy paper says.

Canada's government has legal obligations to protect personal data and highly sensitive information related to national security, cabinet discussions, military affairs and legal matters.

As a result, Treasury Board has drafted a policy declaring all Protected B, Protected C and classified electronic federal data must be stored in a government-approved computing facility located in Canada or within the premises of a department abroad, such as a diplomatic mission, the paper says.

Canada also plans to limit the kinds of files that can be stored in the cloud and to use encryption to shield sensitive data from prying eyes.

There are risks associated with both moving to the "alternative service delivery model" of the cloud and sticking with the government's aging computer systems, says Alex Benay, the federal chief information officer, in an October memo to the Treasury Board secretary accompanying the paper.

"Ultimately it becomes a risk trade-off discussion, exchanging existing risks for data sovereignty risks (that can be mitigated to some extent)."

Among the current difficulties is the fact the government's "aging and mission-critical (information technology) infrastructure are at risk of breaking down and must be renewed," the paper says. Transforming these systems is "proceeding slower than anticipated," in part due to the challenges and complexities of consolidating 43 departments.

In the same vein, departments have experienced problems with fixing weaknesses promptly, leaving the government "exposed to cyberthreats," the paper says. In contrast, cloud service providers have significant budgets to "maintain, patch and secure" their systems.

Finally, the government wants to follow the global trend of providing better digital services for citizens, but demand for computing capabilities and storage space "exceeds the supply available," the paper acknowledges.

"Cloud first" policies have already been adopted by Australia, Britain, New Zealand and the United States, Canada's Five Eyes allies.

The U.S. has served notice it wants an end to measures that restrict cross-border data flows, or require the use or installation of local computing facilities. It is among the American goals for ongoing NAFTA renegotiation, posing a possible headache for Canada's cloud-computing plans.