The Conservative leadership contender went on to joke some were “‘should be in prison’ bad”, drawing laughter from the audience at a Tory conference fringe event.
Undermining their ministers and leaking official secrets were among the accusations former minister Ms Badenoch levelled against civil servants.
“It is not all civil servants. I don’t want people to get me wrong,” she told the audience at The Spectator magazine event, when asked if the government department staff should have term limits.
Ms Badenoch added: “I think that civil servants are like everybody else. They come in to do a job and I would say about 10% of them are absolutely magnificent.
“The trick to being a good minister is to find the good ones quickly, bring them close and try and get the bad ones out of your department as quickly as possible.”
“There is about 5% to 10% of them who are very, very bad. You know, ‘should be in prison’ bad,” she added in a remark which the audience laughed at.
The North West Essex MP, who served in several government departments when the Tories were in power, added: “Leaking official secrets, undermining their ministers… agitating.
“I had some of it in my department, usually union-led.
“But most of them actually want to do a good job, and the good ones are very frustrated by the bad ones.”
Elsewhere at the event, Ms Badenoch claimed that HR departments are “running the economy right now”, in a jibe at cautious workplace culture in the UK.
She faced criticism earlier during the conference for having suggested statutory maternity pay places an “excessive” burden on small businesses.
In a main stage appearance on Monday, Ms Badenoch compared the way her opponents had used the remark against her to the quote often attributed to former prime minister Margaret Thatcher that there is “no such thing as society”.
Ms Badenoch said the remark had been “cut down into a soundbite that was used to attack her (Thatcher)”, in a similar manner to the backlash she had faced.
Chancellor of the Duchy of Lancaster Pat McFadden hit out at Ms Badenoch over her suggestion some civil servants “should be in prison”.
Mr McFadden said: “Not only are the prisons close to collapse because of Tory failure, but the continuity leadership candidates are still blaming everyone else for their record.
“Civil servants work hard for the country every day and deserve better.
“When the Conservatives were in power they were more focussed on stoking up divisions than delivering for the public. This shows they have not changed.”
