BlackBerry’s (NSDQ: BBRY) BB 10 operating system has been dealt a substantial blow by the British government, which has rejected the smartphone software as unsafe for essential government work, according to a report in the U.K.’s Guardian.

According to the report, the Communications-Electronics Security Group (CESG), the U.K.’s national testing authority for information assurance,  confirmed that BB10 and BlackBerry Balance–the company’s BYOD and mobile device management (MDM) solution to wall off work-related apps and data from personal information held on a user’s device–failed its security measurements. The CESG previously cleared BlackBerry 7.1 for security classifications up to “Restricted,” or two levels below “Secret.”

With BlackBerry trying to re-establish its presence among enterprise and government customers, news that it had failed the U.K.’s security standards for essential government work is, to say the least, ill-timed. The company is slated to release its Z10 smartphone in the U.S. on Friday and questions about its BYOD and MDM technology may not sit well with business customers.

BlackBerry confirmed that the BB10 OS failed the CESG’s security tests. In a statement, the mobile device maker said: “We have a long-established relationship with CESG and we remain the only mobile solution approved for use at ‘Restricted’ when configured in accordance with CESG guidelines. This level of approval only comes following a process which is rigorous and absolutely necessary given the highly confidential nature of the communications being transmitted.”

Without providing any details, BlackBerry blamed its failure to receive CESG approval on a restructuring of the approval process, which, the company argued, altered the timeline for BB 10 to pass muster. It pointed to similar security nods it had gained from the U.S. government’s FIPS 140-2 certification and the German government’s procurement and information security office’s sanction as examples of BB 10’s suitability.

As for when BlackBerry will resubmit BB 10 for the U.K’s security approval, the vendor would only give a stock answer: “We are continuing to work closely with CESG on the approval of BlackBerry 10 and we’re confident that BlackBerry 10 will only strengthen our position as the mobile solution of choice for the UK government.”

Should BlackBerry be unable to sufficiently overcome the CESG’s security objections, the company might suffer millions in lost sales as a result. The British government and National Health Service (NHS) are two of BlackBerry’s largest customers in that country with thousands of users. And, a rebuke of that magnitude certainly would likely cascade to U.S. accounts.

Earlier this week, BlackBerry chief Thorsten Heins pledged that the device maker will have 100,000 native apps ready to go for the Z10 smartphone’s U.S. kickoff on Friday, March 22.