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Government Ending Contractor ID Monopoly

The federal government awards over a trillion dollars each year in contracts and grants, and these days a lot of that information is posted online so the public can keep an eye on where exactly our money is going. But there has been a nagging problem with the data: the government has been paying millions each year to use a proprietary identification system to track companies and other recipients of taxpayer dollars. However, a new rule change may be the beginning of the end for that arrangement, thereby ending the monopoly and saving millions.

Being able to track the recipients is one of the cornerstones for spending accountability. Despite that fact, the federal government has no internal identification system it can use to track companies receiving the money. Instead, Uncle Sam has been renting one from the private sector. Dun & Bradstreet established their Data Universal Numbering System (DUNS) as a finance tool for Wall Street. Given that the DUNS already covered so many companies, the federal government opted to use it rather than establishing its own ID system. Which seems to make sense. After all, why reinvent the wheel?

Well, it turns out there are a couple of good reasons. First, the Wall Street wheel doesn’t really fit the government’s needs. It doesn’t have good coverage of non-corporate entities—universities, non-profits, research institutes, public services, and others—which receive money from the federal government. Additionally, the DUNS numbers don’t do a good job of tracking changes in ownership over time. The system was designed to keep track of who owns what right now. But when looking at spending over time, we are more interested in who owned a particular division or company back when it received the federal award.

The licensing fees can also become a barrier to use. In 2014, the Recovery Accountability and Transparency Board, the federal agency overseeing stimulus and Hurricane Sandy spending, did not renew the licensing agreement for the DUNS numbers because it was “too expensive.” As a result, the government and the public lost identifier data on billions of dollars spent under the Recovery Act and Hurricane Sandy assistance.

Instead of acknowledging the mismatch, the government has spent years trying to make DUNS work. It wrote it into regulations that DUNS was the only acceptable ID and that recipients of federal funds had to go get a DUNS number if they didn’t have one. This hasn’t really solved any of the underlying problems and  has even made things worse with another problem: multiple IDs for the same entity. People unware that their company or division already has a DUNS number, would go get another one and then someone else would get yet another one later, and on it would go. Some of the large contractors may have 10 or more DUNS numbers.

Now the General Services Administration has proposed amending the Federal Acquisition Regulation to redefine unique entity identifiers and eliminate specific references to DUNS. This is the first step to getting a better ID system. The rule also notes that the federal government “will establish a transparent process for exploring potential alternatives to existing entity identifiers.”

The Project On Government Oversight supports the proposal to end Dun & Bradstreet’s monopoly. While we understand how the federal government came to rely on the DUNS identifiers, the fact remains that the system was not developed to serve as a government identifier and thus fails to serve the needs of the government and the public. It is long past time to replace DUNS with a better system.

By: Sean Moulton
Senior Policy Analyst, POGO

Photo of Sean Moulton Sean Moulton is a Senior Policy Analyst at POGO.

Topics: Government Accountability, Contract Oversight

Related Content: Contractor Accountability, Government Privatization, Competition in Federal Contracting

Authors: Sean Moulton

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