According to a letter the Government Accountability Office (GAO) sent to Sen. Ben Nelson (D–Neb.) this week, the federal government may be in a tough spot with regard to overseeing the $1 trillion it spends every year on contracts, grants, and financial assistance.
The problem, according to the GAO, is that the General Services Administration (GSA) heavily relies on one particular recordkeeping system developed by a private company. The Data Universal Numbering System assigns a nine-digit “DUNS” number to all business entities that seek to do business with the federal government, such as top federal contractor Lockheed Martin, as shown above in a screenshot taken from the USAspending.gov database. DUNS numbers are used to uniquely identify businesses throughout the world. (Many businesses have multiple DUNS numbers since a number is assigned to each physical location of the organization. Lockheed, for example, is currently listed under 243 different DUNS numbers in the Central Contractor Registration (CCR) database.) The DUNS numbering system is also the exclusive property of global business services firm Dun & Bradstreet, which charges the GSA millions of dollars a year to use it under a sole-source contract.
"GSA believes that Dun & Bradstreet effectively has a monopoly that has contributed to higher costs," according to the GAO. Those costs, which include a growing list of other business information services, total approximately $19 million per year. This monopoly partly resulted from provisions written into the Federal Acquisition Regulation (FAR) and directives issued by the Office of Management and Budget (OMB) requiring all contractors, grantees, and other entities seeking federal funds to acquire a DUNS number. As a result, DUNS numbers have essentially become the backbone of the main federal spending databases: USAspending.gov, CCR, the Federal Procurement Data System - Next Generation, the Excluded Parties List System (EPLS), the Past Performance Information Retrieval System (PPIRS), and the Federal Awardee Performance and Integrity Information System (FAPIIS).
Due to the proprietary nature of DUNS numbers, Dun & Bradstreet limits how and where the government may use them. For example, you may remember back in January 2011 when the Department of Defense released a report on the total value of contracts entered into with companies that had been indicted for, settled charges of, or had been fined or convicted of contract-related fraud. The GAO says that restrictions in GSA’s contract with Dun & Bradstreet hampered DoD’s ability to analyze contractors’ corporate relationships, which somewhat undercut the report’s findings. DUNS numbers are also not subject to transparency requirements such as the Freedom of Information Act (FOIA), making it difficult to independently verify the accuracy or comprehensiveness of DUNS information.
According to the GAO, GSA officials have been analyzing their options, such as switching to a new numbering system, either government-created or a hybrid public/private system. However, given the DUNS system’s ubiquity throughout the federal government, switching to a new system could be prohibitively expensive. Even if GSA changed to a government-created system, it would still need contractors to manage the system and provide the other services that Dun & Bradstreet provides. GSA could also try to negotiate with Dun & Bradstreet to ease the restrictions on the use of DUNS numbers. GSA expects to complete this analysis and report its findings by September.
Dun & Bradstreet provided the following statement to POGO in regard to the GAO letter:
Since 1926, Dun & Bradstreet has been proud to provide data and insight to the U.S. Government. Our partnership with the General Services Administration (GSA) enables D&B to provide a vast array of data, software, and services in a cost-effective, flexible manner to meet evolving government-wide priorities. We always seek to be responsive to our customers’ unique requirements, consistent with our strong heritage, market-leading solutions, and high standards of customer service.
Two years ago, the U.S. Senate sounded the alarm about “agency capture” – that is, the government’s increasing reliance on, and subservience to, contractors and regulated companies. The Senators had in mind the financial meltdown of 2008 and the massive oil spill that had just occurred in the Gulf of Mexico, but the term could also describe the GSA’s relationship with Dun & Bradstreet.