Feedback: Awardee/Recipient Unique Identifier and Legal Business Name

Thank you for your feedback on the data element Awardee/Recipient Unique Identifier and Legal Business Name. We will consider your feedback as we continually assess how we can improve data definitions. You may still contribute the discussion for other data elements. Check http://fedspendingtransparency.github.io/dataelements/ to find data elements with open feedback pages.

This is the place to leave your feedback and questions about the following data elements:

Awardee/Recipient Unique Identifier
Awardee/Recipient Legal Business Name
Ultimate Parent Unique Identifier
Ultimate Parent Legal Business Name

The feedback period for these elements closes on 5/15/2015. The proposed definition of the above elements: http://fedspendingtransparency.github.io/whitepapers/unique-id-business-name/ Federal Spending Collaboration home page: http://fedspendingtransparency.github.io/

Although the following adjustments are already in plans for final listing, please note: On the "Data Element" page http://fedspendingtransparency.github.io/dataelements/ (accessed from top navigation): The data element names are not analogous to each other nor to the ones proposed on this page.

Of greatest concern is the use of "ultimate recipient parent" for the Parent Identifier element but just "recipient parent" for the business name. and Legal Business Name; Legal Business Identifier Number: They both need to have "Recipient" or "Awardee/Recipient" included and the latter needs to include the term "Unique"

A unique entity identifier is required to, among other things, verify entity information, location, past performance, integrity data, incorporation information, provide payment, and create transparency. This misses one of the most important facets of a unique entity identifier. I would suggest adding a bit to the end. “… and create transparency through enabling identification of global relationships across all entities via non-proprietary and open methods.” A key component of transparency analysis isn’t analyzing what has been reported (like the parent company, sometimes) – it’s finding the less-evident relationships through network analysis. There are many non-US actors that are part of the federal government procurement process; it is important that visibility is provided through the use of globally-adopted standards that are maintained for high quality.

Further, if DUNS has a contractual relationship to provide these services, can the government not negotiate that they also include a new identifier, such as the Global LEI, in their data set. Functionally speaking, given that DUNS is a unique entity identifier, we are talking about a data cross walk between DUNS and a new identifier (without all the proprietary use constraints). We just need a mapping table between DUNS and LEI. Of course this is where we will discover data quality issues; but the migration to the use of a new ID for reporting does not necessarily mean a system change in every financial system. And even if such a change were the end goal, a translation table could be a step in that direction.

I would agree that we need to have visibility to the entire hierarchy of entity ownership from awardee to the country entity (to the global entity) and all the levels in between. Jumping from awardee all the way to the top misses a lot of vital information regarding relationships in between.

While I fully understand the need for a unique business identifier, I am a bit troubled by using a private company to provide this number. The DUNS information is notoriously inaccurate and gathered from just about anything they can find on the Internet. Our public agency only realized recently that we were in the D&B database and most of the info was incorrect. i also recently researched a company where the company value was off by a magnitude of 10000 times. I am concerned that using the proprietary DUNS number will link consumers of the data to information that, not only can we not control, but is often inaccurate. This opens the door for agencies having to answer to erroneous information, as well as having to chase D&B to try to keep the data correct. Neither seems a good use of time or public funds.

Questions

Did GSA conduct a feasibility study for alternatives to using DUNS after the 2012 GAO report? According to the GAO report, GSA's findings were expected in September 2012.
What is the involvement of GSA or the U.S. Government in the Global Legal Entity Identifier System and the use of Open LEIs? Has a feasibility study been conducted looking at the use of or participation in the management of Open LEIs? It appears that the U.S. Commodity Futures Trading Commission is the sponsoring authority for an Open LEI local registering organization.
What relationship does OMB A-119 have with "standardized and unique identification of entities"? It seems as if A-119 is designed both to prevent the use of proprietary non-voluntary consensus standards as well as prevent the government's creation of government-specific standards. Instead A-119 indicates that government should use openly licensed standards developed by voluntary consensus bodies, standards bodies which government should participate in when appropriate. Perhaps unique identifiers don't fall under the description of standards as intended by A-119, but by removing references to DUNS in the FAR and 2 CFR and replacing it with a “unique entity identifier” or a "requirement for standardized and unique identification of entities" it seems as if the non-proprietary and non-government-specific principles of A-119 may be relevant.
In evaluating the feasibility of a government managed system, has anyone considered the cost-benefit trade off of US-government-specific identifier versus a non-proprietary international identifier system given the global nature of today's markets?
Are there other government-wide guidelines for managing non-proprietary unique identifiers or are there other precedents worth investigating? For instance, DOI's or Digital Object Identifiers are an ISO standard (ISO 26324) used by DOI registration services. DataCite.org is used to register and maintain many DOIs including those by at least one Federal Government Agency (Dept of Energy's OSTI)

A summary with some key points from "Awardee/Recipient Unique Identifier and Legal Business Name"

The Federal government currently has no plans or recommendations to discontinue the use of DUNS®, but will explore potential alternatives to meet the requirement for a unique identifier currently met by use of the DUNS® number.

The Federal government is changing the FAR and 2 CFR to remove the proprietary references of DUNS® and instead refer to a “unique entity identifier”.
While the proprietary references are being removed, the requirement for standardized and unique identification of entities remains.
The Federal government is mitigating these risks for taxpayers by using a data standard for a unique identifier that is governed by the interagency Award Committee for E-Government (ACE) and managed by the General Services Administration’s Integrated Award Environment (IAE).
Going forward, the Federal government will explore potential alternatives to meet the requirement for a unique identifier currently met by use of the DUNS® number.
For the data standardization effort, there are no changes recommended at this time to the existing standard for unique entity identifier.

A summary with some key points from the 2012 GAO Report on the Federal Government’s use of DUNS numbers

The full text of the report is copied below

GSA believes that Dun & Bradstreet effectively has a monopoly for government unique identifiers that has contributed to higher costs.
The current contract, which was awarded in 2010 for up to 8 years (3-year base period plus options for 5 additional years) and is now worth up to $154 million, is the latest in a series of sole-source, multiple-year contracts awarded to Dun & Bradstreet. GSA officials told us the DUNS contracts have been sole-source awards because of the FAR requirement that all government contractors obtain a DUNS number, and because they have been unable to identify an acceptable alternative.
GSA officials said that the current sole-source environment results in higher prices to the government, and that a competitive acquisition likely would result in lower prices to GSA. They also expressed concern that Dun & Bradstreet’s prices may continue to rise as the government’s use of its services continues to expand.
Due to the proprietary nature of DUNS numbers, Dun & Bradstreet has placed restrictions on how GSA can use DUNS numbers. This limits the purposes for which the government can use the data and hampers the ability to switch to a new numbering system.
DUNS numbers are not subject to transparency requirements such as Freedom of Information Act requests so it is difficult to determine independently the accuracy or comprehensiveness of DUNS information.
Organizations concerned about transparency in government activities also have raised concerns related to using a numbering system that does not enable the public to fully track entities doing business with the government.
One company noted that some federal agency officials have interpreted the DUNS requirement in the FAR to mean that DUNS numbers are required in other contexts as well. The company provided several examples, one of which was a solicitation to create a new agency-specific database that required the database to use DUNS numbers. Although this solicitation was using full and open competition, the company told us that including the DUNS number requirement in the solicitation ensured that only Dun & Bradstreet could qualify for the contract.
GSA has conducted market research and plans to conduct a cost-benefit analysis and feasibility study for alternatives to using DUNS numbers by September 2012.
After a 2011 study for alternatives, GSA ruled out changing to a non-proprietary numbering system because none of the sources sought responses included a non-proprietary alternative.

2012 GAO Report on the federal government’s use of DUNS numbers: Government Is Analyzing Alternatives for Contractor Identification Numbers

Source: http://www.gao.gov/assets/600/591551.pdf

June 12, 2012

The Honorable E. Benjamin Nelson Chairman Subcommittee on Legislative Branch Committee on Appropriations United States Senate

Subject: Government Is Analyzing Alternatives for Contractor Identification Numbers

In 2011, the federal government spent more than $1 trillion on contracts and grants. To help manage and oversee these activities, the government relies on a number of data systems which are used, for example, to advertise solicitations, report awards, and track performance. The government needs a way to distinguish between the numerous entities with which it does business. For decades, the government has relied on Dun & Bradstreet’s Data Universal Numbering System (DUNS) as a unique identifier. The General Services Administration (GSA) contracts with Dun & Bradstreet for use of DUNS numbers in governmentwide data systems. Over time, DUNS numbers have become embedded in various government data systems and processes, and all prospective contractors, grantees, and other federal aid recipients generally are required to have a DUNS number in order to do business with the government. In recent years, government officials have expressed concerns about the rising costs of using DUNS numbers. In addition, other companies that offer unique identifier numbering systems have questioned why the government will not consider their products and services as an alternative to DUNS numbers.

You asked us to review the federal government’s use of DUNS numbers. In response, we examined [1] how the government currently contracts for and uses DUNS numbers; [2] the challenges posed by the government’s use of DUNS numbers; and [3] steps GSA has taken to mitigate these challenges. To address these objectives, we analyzed GSA documents such as analyses of alternatives and contracts and interviewed officials from GSA, other agencies, and Dun & Bradstreet. We also interviewed officials from companies that compete with Dun & Bradstreet in commercial markets.

We conducted this performance audit from January 2012 to June 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Results in Brief

In recent years, the government’s reliance on DUNS numbers has increased significantly. There has been a dramatic increase in the number and types of entities that are required to have DUNS numbers to do business with the government. GSA also has expanded the level of business information services that it acquires from Dun & Bradstreet. These services include data verification and monitoring as well as corporate linkage information to support enhanced reporting capabilities. As GSA has increased its use of the DUNS number and business information services, its costs have increased from about $1 million in 2002 to approximately $19 million per year under the current contract. The current contract for DUNS numbers is a sole-source contract awarded to Dun & Bradstreet in 2010 for a 3-year base period with options for 5 additional years—the contract now totals up to $154 million.

There are several challenges associated with GSA’s contract for unique identification numbers. GSA believes that Dun & Bradstreet effectively has a monopoly for government unique identifiers that has contributed to higher costs. This effective monopoly results in part from government regulations and directives that require contractors, grantees, and other entities seeking to do business with the government to obtain a DUNS number. Also, due to the proprietary nature of DUNS numbers, Dun & Bradstreet has placed restrictions on how GSA can use DUNS numbers. This limits the purposes for which the government can use the data and hampers the ability to switch to a new numbering system. Dun & Bradstreet’s competitors have raised concerns regarding the government’s use of DUNS numbers as its unique identification number. These companies believe that the integral role of DUNS numbers in government systems has provided Dun & Bradstreet with unfair advantages in the government or commercial markets for business data. Other organizations have expressed concerns about the government’s use of DUNS numbers as well. For example, one organization noted that DUNS numbers are not subject to transparency requirements such as Freedom of Information Act requests so it is difficult to determine independently the accuracy or comprehensiveness of DUNS information.

To address concerns about the high costs and proprietary restrictions associated with the government’s use of DUNS numbers, GSA recently began an analysis of alternatives for unique numbering systems. In its ongoing analysis, GSA has conducted market research and plans to conduct a cost-benefit analysis and feasibility study for alternatives to using DUNS numbers by September 2012. GSA has concluded that it is not in the best interests of the government to change from one proprietary number to another. The agency is therefore evaluating the advantages and disadvantages of replacing DUNS numbers with a government-owned numbering system. GSA also will be considering a hybrid approach utilizing both DUNS numbers and a government-owned numbering system, which could be a viable alternative. A key factor in deciding whether to replace DUNS numbers in government data systems is the cost of switching. In the event of a change, GSA and dozens of other agencies would have to modify their data systems, replace all DUNS-related data in those systems, and update policies and procedures that refer to DUNS numbers. GSA officials have said switching costs could be substantial and, while they have outlined steps for capturing costs, they are still developing their methodology for estimating these costs. Meanwhile, even as GSA continues using DUNS numbers, the agency may be able to ease current restrictions on their use, such as the requirement to delete associated DUNS data when the contract with Dun & Bradstreet ends. We are recommending that GSA initiate negotiations with Dun & Bradstreet to that end. GSA agreed with our recommendation.

Background

Governmentwide acquisition systems, finance systems, and other data systems depend on the ability to assign a unique identification number to businesses and other organizations seeking to do business with the government. The federal government has contracted with Dun & Bradstreet since 1978 to provide DUNS identification numbers for all government contractors. A DUNS number is a unique nine-digit number that is assigned to every business entity in Dun & Bradstreet’s global business database, which according to Dun & Bradstreet contains more than 166 million records. Many businesses have multiple DUNS numbers since Dun & Bradstreet assigns a number to each physical location of an organization (such as branches, divisions, and headquarters). In addition to the right to use DUNS numbers as a unique identification number, GSA also contracts with Dun & Bradstreet to provide business information and related services on all existing and potential government contractors and awardees. This information is linked to the business entity through the DUNS number. The DUNS number and associated business information are owned and controlled by Dun & Bradstreet, but licensed to the government to be used for selected acquisition purposes.

The federal government began using DUNS numbers in the 1970s to identify and track contractors. During the late 1980s and early 1990s, the government replaced the DUNS number and established its own database of Contractor Establishment Code (CEC) numbers. The government contracted with Dun & Bradstreet to operate and maintain this database. In 1996, the government made a determination to replace the CEC numbers and use the commercially available DUNS number to fulfill its needs; a Federal Acquisition Regulation (FAR) interim rule was issued to implement this determination. [61 Fed. Reg. 67,412 (Dec. 20, 1996)] Government officials said the decision was based on several factors, most notably that the DUNS number was widely used and accepted, both domestically and internationally, and that the DUNS number was viewed as the only reliable mechanism for cross-walking to other numbering systems. In 1998, the FAR was amended with a final rule to replace the CEC with the DUNS number as the means of identifying contractors in the government’s main reporting data system, the Federal Procurement Data System (FPDS).[2] In 2003, another amendment to the FAR specified that contractors must obtain and submit a DUNS number in order to register in the Central Contractor Registration (CCR), a data system in which all prospective contractors generally must register to be eligible for government contracts.[3]

GSA is the agency responsible for managing the Dun & Bradstreet contract. That contract provides the rights to use DUNS numbers in CCR, the Federal Procurement Data System-Next Generation (FPDS-NG), and several other governmentwide acquisition data systems. In 2002, the contract became part of the Integrated Acquisition Environment (IAE), a GSA-led initiative to bring together different acquisition data systems. IAE consists of several data systems that support actions integral to the acquisition process, such as posting contracting opportunities, registering prospective contractors, assessing contractor performance, and reporting contract actions. [4] GSA uses memorandums of understanding with the 24 departments and agencies now covered by the Chief Financial Officers Actof 1990 to collect funding contributions, which pay for the development, operations, and maintenance of IAE’s portfolio, including the Dun & Bradstreet contract. GSA is currently working to consolidate its portfolio of data systems into one single system known as the System for Award Management (SAM). The first phase of SAM will incorporate the functionality of three IAE data systems—CCR, the Excluded Parties List System (EPLS), and the Online Representations and Certifications Application (ORCA). GAO recently reported on GSA’s progress in implementing SAM and found that higher than anticipated costs and constrained resources have resulted in delays and pose a risk to the future viability of the project. [5] In response to our recommendations, GSA is currently reassessing its approach to developing and implementing SAM.

The DUNS Number Has Become an Increasingly Integral Component in How Government Data Systems Operate

In recent years, the government’s reliance on DUNS numbers has increased and they have become an integral component in how government data systems operate. For instance, there has been a dramatic increase in the number and type of entities that are required to have DUNS numbers to do business with the government. When the DUNS number was incorporated into the FAR as a final rule in 1998, only prospective contractors were required to obtain DUNS numbers. In 2003, the Office of Management and Budget (OMB) issued guidance that also required grant and cooperative agreement applicants to obtain DUNS numbers. [6] OMB expanded this policy in 2008 when it required DUNS numbers for recipients of loans and other types of financial assistance. [7] In January 2006, there were 403,000 contractors registered in CCR. There are approximately 625,000 entities currently registered in CCR, including contractors, grantees, and other federal assistance recipients and each had to obtain a DUNS number in order to register.

In addition to an increase in the number of entities required to obtain a DUNS number, the level of business information services that GSA acquires from Dun & Bradstreet also expanded. These services include verifying basic information such as an entity’s name and address, providing corporate linkages, and monitoring changes to entity names or corporate ownership. [8] Previously, GSA’s contract with Dun & Bradstreet only provided business information services for the acquisition community and the IAE systems associated with it. This changed when the Federal Funding Accountability and Transparency Act of 2006 (Transparency Act) required OMB to ensure the existence and operation of a website at which the public could search certain data about government financial awards, including contracts, grants, and loans. [9] Among the required searchable elements for each award is a unique identifier of the entity receiving the award and of the parent entity of the recipient. OMB chose the DUNS number to fulfill the unique identifier requirement. With this action the number of entities for which Dun & Bradstreet provides corporate linkage information expanded from just contractors to all recipients of federal awards. Later, in 2010, OMB also began requiring all federal awardees to register in CCR, which increased the level of business verification information provided by Dun & Bradstreet. [10] Finally, the American Recovery and Reinvestment Act of 2009 (Recovery Act) temporarily increased the number of entities receiving federal awards, thereby increasing the number of entities registering in CCR for which the government collected DUNS information. [11]

The DUNS number has also become embedded in agencies’ internal data systems and is used to support other agency missions. IAE officials report that most of the more than 60 agencies that use IAE acquisition systems rely on DUNS numbers in their internal financial and contract writing systems. For example, CCR contains information on contractors, including DUNS numbers and entity name and address, which agencies download and use to make payments. The DUNS number has become so integrated and common in government financial systems that GAO recommended its use in a report that provided guidelines on properly functioning financial processes. [12] In addition, some agencies have separate contracts with Dun & Bradstreet for DUNS numbers and business information services to support their specific missions. GSA officials said that agencies may use Dun & Bradstreet data from CCR or other IAE systems for acquisition purposes. However, if they need DUNSrelated information or services that are not covered by the GSA contract, they must enter into their own contract with Dun & Bradstreet. For instance, the Small Business Administration has a contract with Dun & Bradstreet to use DUNS numbers and related data to help provide financial oversight of its loan programs. Other agencies have their own contracts with Dun & Bradstreet for data used for visa fraud detection, financial fraud detection, and air cargo risk management.

As use of the DUNS number and business information services has increased, GSA’s costs have increased as well. Between 2002 and 2004, the cost of the DUNS number contract was tied to the number of CCR registrants and cost about $1 million per year. In response to the new demands for business information services required by the Transparency Act, GSA signed a contract with Dun & Bradstreet in 2007 that changed the pricing structure from a per-transaction model, where costs were based on the number of CCR registrants, to an “enterprise” model where the government is provided with access to Dun & Bradstreet business data for a fixed price. GSA officials told us that the requirements in the Transparency Act to make corporate linkage information available on a public website also resulted in higher prices since Dun & Bradstreet needed to be compensated for making proprietary information publicly accessible. While GSA believes this pricing structure is more cost effective given the new requirements, it has resulted in a large increase in payments to Dun & Bradstreet, which average $19 million per year under the current contract (see figure 1). There was a temporary drop in payments in fiscal year 2011 because GSA modified its contract with Dun & Bradstreet to defer payments to later years. Under the terms of the contract, GSA had been scheduled to pay Dun & Bradstreet $18 million in August 2011. In order to support efforts related to the development of SAM, GSA negotiated two modifications to the contract that allowed GSA to defer $14 million from fiscal year 2011 to fiscal year 2012. This action was a result of the fiscal challenges GSA has faced as it consolidates its portfolio of data systems into its new unified data system, SAM.

The current contract, which was awarded in 2010 for up to 8 years (3-year base period plus options for 5 additional years) and is now worth up to $154 million, is the latest in a series of sole-source, multiple-year contracts awarded to Dun & Bradstreet. GSA officials told us the DUNS contracts have been sole-source awards because of the FAR requirement that all government contractors obtain a DUNS number, and because they have been unable to identify an acceptable alternative. In addition to assigning DUNS numbers and providing related services, Dun & Bradstreet operates a help desk to support current and new registrants and carries out special analyses and ad hoc projects. GSA officials reported that assigning DUNS numbers and the help desk represent about 20 percent of the contract price. The remaining 80 percent of the price primarily pays for the business verification and corporate linkage information that Dun & Bradstreet provides.

The Government Faces Several Challenges Associated with Using DUNS Numbers

The government faces several challenges associated with GSA’s contract for unique identification numbers. GSA believes that Dun & Bradstreet effectively has a monopoly that has contributed to higher costs. This effective monopoly results in part from the FAR requirement and OMB directives that require all contractors, grantees, and other entities seeking to do business with the government to acquire a DUNS number. GSA officials have said that as long as the FAR requirement is in place they must use the DUNS number and cannot hold a competition for unique identification numbers. GSA officials said that the current sole-source environment results in higher prices to the government, and that a competitive acquisition likely would result in lower prices to GSA. They also expressed concern that Dun & Bradstreet’s prices may continue to rise as the government’s use of its services continues to expand. Additionally, members of the Acquisition Committee for e-Gov (ACE), IAE’s governance committee, have also questioned the high costs for DUNS numbers as Dun & Bradstreet’s contract is IAE’s largest expense. [13] In response to cost concerns, GSA officials held discussions with a Dun & Bradstreet competitor in 2008 to help gauge the reasonableness of the prices that Dun & Bradstreet charged. GSA officials found that Dun & Bradstreet’s prices were relatively high compared to this competitor, which offered another proprietary product, and the officials said they used this information to negotiate a better price from Dun & Bradstreet for the contract awarded in 2010. GSA officials said they negotiated a 25 percent reduction in prices in exchange for a longer contract length and changes in how GSA administers the contract. However, despite the lower prices, GSA officials are still concerned with the high costs associated with the use of DUNS numbers relative to other IAE program costs.

Another challenge the government faces involves the proprietary limitations that Dun & Bradstreet has placed on GSA’s use of DUNS numbers. Specifically, GSA’s contract with Dun & Bradstreet limits how and where Dun & Bradstreet data can be used. For example, the contract specifies that Dun & Bradstreet data may only reside in IAE data systems and on federal agency acquisition systems, and can be used only for acquisition purposes. Any other uses or disclosure of data outside of the contract scope and licensing terms, even if the activity is government related, would require either a contract modification or a new separate contract. In at least one case, this has hampered the government’s ability to effectively use DUNS numbers. In 2009 Congress requested that the Department of Defense (DOD) report on the total value of DOD contracts entered into with contractors that have been indicted for, settled charges of, or had been fined or convicted of fraud in connection with any contract entered into with the federal government over the past 10 years. [14] In responding to this directive, DOD obtained fraud case data from the Department of Justice that did not contain DUNS numbers. DOD used the company names to search for contract obligation data in FPDS-NG. Without DUNS numbers and their associated corporate linkage information, however, DOD was unable to identify the parent company of all offending companies and could not capture all the obligation data. DOD was unable to use corporate linkage information since this use of data fell outside the scope of GSA’s contract with Dun & Bradstreet. [15]

Additionally, there are other restrictions in the contract that could cause challenges for the government if it were to change to an alternative numbering system. According to GSA, the contract specifies that the government would have to delete certain Dun & Bradstreet provided data from its databases at the end of the GSA contract. GSA officials said that under the terms of the contract, GSA is not required to delete the DUNS numbers, but could have to purge associated data. This would include data elements such as business name and address. [16] GSA officials said this would apply to the IAE systems in addition to agency acquisitions systems if GSA ended the Dun & Bradstreet contract and moved to a new numbering system. Given the widespread use of DUNS numbers and associated data in government data systems, this could be very disruptive.

Dun & Bradstreet’s competitors have raised concerns regarding the government’s use of DUNS numbers as its unique identification number. We spoke with three companies that compete in the commercial market with Dun & Bradstreet and each of these companies raised issues that they believe provide Dun & Bradstreet unfair advantages in the government or commercial markets for business data. For instance, one company noted that some federal agency officials have interpreted the DUNS requirement in the FAR to mean that DUNS numbers are required in other contexts as well. The company provided several examples, one of which was a solicitation to create a new agency-specific database that required the database to use DUNS numbers. Although this solicitation was using full and open competition, the company told us that including the DUNS number requirement in the solicitation ensured that only Dun & Bradstreet could qualify for the contract. Additionally, the same company also pointed out that the requirement to register in CCR means that thousands of companies provide Dun & Bradstreet with their business information, while Dun & Bradstreet’s competitors have to discover this information using their own resources. Because of this, the competitor believes that Dun & Bradstreet has a monopoly for government identifiers which gives Dun & Bradstreet an unfair advantage in the competitive commercial market for business data as well.

Organizations concerned about transparency in government activities also have raised concerns related to using a numbering system that does not enable the public to fully track entities doing business with the government. For example, in a 2008 letter to OMB, the National Association of State Auditors, Comptrollers, and Treasurers (NASACT) noted that Dun & Bradstreet is not accountable to any government authority, yet DUNS numbers play a vital role in providing a governmentwide identifying system. NASACT also cited data reliability concerns with Dun & Bradstreet’s process for assigning DUNS numbers to state government agencies and other entities. OMB Watch, a nonprofit organization, also has criticized the lack of transparency associated with using the DUNS numbers. For example, the organization noted that DUNS numbers are not subject to transparency requirements such as Freedom of Information Act requests so it is difficult to determine independently the accuracy or comprehensiveness of DUNS information. OMB Watch encouraged the government to develop its own unique identification number rather than remain dependent on a privately owned system that is inaccessible to the public.

_GSA Is Analyzing Alternatives to Mitigate DUNS Challenges, but Results Yet to Be Determined _

Concerns about the high costs associated with the government’s use of DUNS numbers have led GSA to consider using alternative unique numbering systems. In 2009, GSA issued a sources sought notice to measure the interest and availability of companies capable of providing a system for unique identification numbers. [17] GSA officials did not know whether any companies other than Dun & Bradstreet offered unique identifiers and related services that were comparable to DUNS numbers. GSA received two responses to its 2009 sources sought notice (and a third from Dun & Bradstreet) and determined that one of the companies was a viable competitor to Dun & Bradstreet. However, in their evaluation of the responses, GSA officials concluded that they could not conduct a competition for unique identifiers until the FAR was modified to remove the DUNS requirement. These officials recommended that GSA initiate a FAR change and then conduct a full and open competition for unique identifiers once the change had been completed. GSA officials said they developed a proposal to change the FAR, but the Federal Acquisition Regulatory Council recommended suspending the effort to change the FAR until the completion of a comprehensive cost and schedule analysis. [18] GSA had not evaluated the costs of changing numbering systems at that time although some agencies had voiced concerns that switching costs could be significant. Shortly after the FAR change was put on hold, GSA awarded the current sole-source contract to Dun & Bradstreet in 2010. In explaining its rationale for awarding a sole-source contract, the agency noted that the FAR required the use of DUNS numbers and Dun & Bradstreet was the only source of DUNS numbers.

In 2011, GSA initiated another effort to identify possible alternatives for unique identification numbers and expects to issue a report on its findings and recommendations by September 2012. This latest effort consists of a sources sought notice as well as a cost-benefit analysis and feasibility study of alternative approaches to acquiring numbering systems. The different approaches that GSA has considered include:

Continue to use DUNS numbers and services

Conduct a full-and-open competition, if the sources sought assessment identifies potential competitors,

Change to a non-proprietary solution, either using a non-proprietary numbering system or obtaining services from one or more vendors, and

Change to a government-owned number and obtain data services from one or more vendors.

GSA issued a sources sought notice in October 2011 and received six responses, including one from Dun & Bradstreet. Based on the responses, GSA determined that there are potential competitors for unique identification numbers. However, GSA has ruled out conducting a full and open competition for numbering systems after concluding that it is not in the government’s best interest to move from one proprietary numbering system (DUNS numbers) to another one. GSA officials said the additional costs and data system disruptions encountered each time it changed numbering systems would at least partially offset any potential cost savings achieved by introducing competition. GSA also has ruled out changing to a non-proprietary numbering system because none of the sources sought responses included a non-proprietary alternative.

GSA is currently considering two strategies as part of its analysis—continuing to use DUNS numbers or changing to a government-owned numbering system. The first option is to continue the current Dun & Bradstreet contract “as-is.” However, this alternative does not address a key concern raised about the use of DUNS numbers. The Dun & Bradstreet contract limits the purposes for which the government may use DUNS information and according to GSA requires the government to delete Dun & Bradstreet data such as business name and address when the contract ends. Two of Dun & Bradstreet’s competitors indicated that they do not require that clients delete their data when a contract ends, but it is unclear what they would offer in a formal contract. Continuing to use DUNS numbers does not prevent GSA from taking steps to ease some of the restrictions that Dun & Bradstreet has placed on the government’s use of DUNS information. GSA officials said that simply by asking Dun & Bradstreet for a discount they were able to negotiate a significant price reduction for the current contract. However, they said they did not raise the issue of expanding the government’s data rights during negotiations.

GSA is also considering changing to a government-owned numbering system. There are several possible government-owned numbers that GSA could use, such as SAM numbers. SAM is scheduled to begin operation in 2012 and once operational, contractors, grantees and other entities seeking to do business with the government will have to register in SAM, which will replace CCR. As entities register, they will automatically be assigned a SAM number. The SAM number was not initially intended to serve as a unique identifier and like other government-owned numbers, GSA would have to add capability to make them viable alternatives to DUNS numbers. For example, SAM does not currently have a registration system to collect name, address, and other information on businesses and other entities so a registration system would have to be created. Similarly, SAM numbers would not provide corporate linkage information or the ability to verify or monitor data so GSA would have to add those capabilities. GSA officials said that if they were to change to government-owned number, they would likely award one or more competitive contracts to manage the numbering system and provide services similar to those that Dun & Bradstreet currently provides. They said that other adjustments and associated costs, both internal to the government and otherwise, could be involved as well. They also said that there could be other solutions not yet identified.

Although there may be numerous benefits to changing to a government-owned numbering system, including long-term cost savings, unlimited data rights, and greater transparency, the switching costs from using DUNS numbers could be prohibitively high. We asked GSA whether it would be feasible to use a hybrid approach in which GSA would continue to use DUNS numbers in addition to a government-owned number for an extended period of time. Under this alternative, GSA would continue its current contract with Dun & Bradstreet while it phases in the use of a government-owned number. Entities registering in SAM would have both a DUNS number and a number from the new system. Once the new numbering system is fully established, GSA would have the option of phasing out DUNS numbers. A hybrid approach could avoid or defer a significant portion of the switching costs, minimize disruptions to agencies, and better position the government to introduce competition for unique identifiers in the future. GSA officials agreed that a hybrid approach was a viable alternative and now are considering it as part of the analysis of alternatives.

GSA officials are planning to assess the feasibility of the alternatives and then begin coordinating with federal agencies to develop a cost estimate for changing numbering systems. Changing to a new numbering system would include costs associated with the following actions:

Adding capabilities to a government-owned number. As noted above, changing to a government-owned number would require GSA to establish a registration process and add the ability to provide corporate linkage information and add data verification and monitoring capabilities.

Modifying data systems. To accommodate a new number, GSA and other agencies would have to change the name of data fields and possibly add new data fields or modify the format of the existing DUNS field in their data systems. For example, DUNS numbers are numeric whereas SAM numbers are alpha-numeric and therefore may not be compatible with current DUNS data fields.

Replacing DUNS information with information from a new numbering system. Changing numbering systems could require agencies to delete DUNS information, including contractor name and address, from their data systems and replace it with information from the new numbering system. This process could be complicated by the data restrictions in GSA’s contract with Dun & Bradstreet. GSA officials said that they are uncertain whether the terms of the contract with Dun & Bradstreet would allow the government to use the existing DUNS information to transition to a new numbering system. If GSA is unable to use DUNS information for transition purposes, it would have to match the new numbering system to existing contractor information without the benefit of using the contractor’s name or address. GSA is planning to discuss with Dun & Bradstreet what rights the government would have in the event of a transition.

Updating policies and procedures. GSA would have to modify the FAR to remove the DUNS requirement and agencies would have to update their FAR supplements. Agencies would also have to update acquisition-related policies, procedures, and documents that refer to DUNS numbers.

GSA provided documents to us reflecting some initial steps it will take to assess switching costs. A GSA official said the agency plans to estimate the costs of changing its own internal systems and then extrapolate the costs to other agencies. GSA’s analysis is still ongoing. The agency has identified potential cost drivers, but it is still developing a methodology for quantifying them. Determining an accurate estimate of switching costs could be difficult due to the number of agencies and data systems involved. GSA identified approximately 80 data systems that contained DUNS information extracted from CCR and would therefore have to be modified in the event of a transition to a new numbering system. There are also many more subsystems within agencies that could potentially be affected by changing DUNS numbers. GSA is still determining how best to capture switching costs associated with these agency data systems.

Conclusions

Rising costs, restrictions on the government’s data rights, and a lack of competition have raised concerns about the government’s use of DUNS numbers as a unique identifier. Those concerns have prompted GSA, not for the first time, to analyze options for changing how it acquires unique identifiers. GSA has a difficult task ahead as it evaluates the legal, contractual, and technical challenges associated with changing identification numbering systems. GSA is still developing its methodology for conducting its analysis so it is too soon to comment on how comprehensive GSA’s analysis will be. Further, choosing an alternative may only be the first step in a process that GSA expects could take years to complete. If GSA decides to change how it acquires unique identifiers, it would need to develop a detailed plan for executing the transition. GSA would need to develop an acquisition plan for acquiring additional services, plan and budget for any additional resources necessary to effect the change, and define the roles and responsibilities for numerous stakeholders. If GSA is able to successfully complete its analysis and a transition plan, it may be able to mitigate the challenges posed by the government’s use of DUNS numbers as a unique identifier. Alternatively, the analysis may demonstrate that GSA’s current approach is the best for the government.

Meanwhile, there may be an opportunity to negotiate better terms for the government under the existing arrangement with Dun & Bradstreet. Even as GSA continues to use Dun & Bradstreet as the provider of unique identifier services, the agency may be able to ease the current contractual restrictions on the use of DUNS numbers, such as the requirement to delete data at the end of the contract, by bringing these provisions more in line with prevailing industry practices.

Recommendation for Executive Action

To ensure that government agencies have improved access to information needed to effectively fulfill their missions, we recommend that the Administrator of GSA initiate discussions with Dun & Bradstreet on ways to reduce current restrictions on the use of DUNS numbers.

Agency Comments and Our Evaluation

We provided a draft of this report to GSA. The agency agreed with our recommendation and indicated it would take appropriate action. GSA’s written comments appear in enclosure I. GSA also provided technical comments that we incorporated as appropriate.

We are sending copies of this report to other interested congressional committees, the Acting Administrator of General Services, and the Office of Management and Budget. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have questions about this report, please contact me at (202) 512-4841 or by email at woodsw@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report were John Oppenheim, Assistant Director; E. Brandon Booth; Jeffrey Sanders; Benjamin Shattuck; Deanna Laufer; and Marie Ahearn.

William T. Woods Director Acquisition and Sourcing Management

Wow @philipashlock - great background info! Thanks!

I know that Dun and Bradstreet representatives have often said in public forums that they would like a seat at the table. I hope that they join in the public dialog. I see a lot of negative in public forums and few counterpoints (other than it is too hard and costly for the government to change to a new number). I know that right now the proposal is to use DUNS (so not much to comment on) - but directionally it looks like the mindset may change with the adjustments to the FAR.

It just occurred to me that we don't hear from Treasury/OMB very much in response to points made. I would hope to hear their voices as well given that this is a public dialog. I realize this concept (open dialog) is new, perhaps there are lots of rules that prevent them from publicly commenting. But it's hard to have a dialog without all the interested voices involved. I hope that if there are rules, that the government finds a way to open dialog going forward.

The more I think of this the more I believe that a good alternative for reporting out (to the public) would be to provide something like an LEI for public use; the government would maintain a data map from DUNS (or whatever they choose) to the LEI. The LEI would in turn enable free and open analysis. This defeats the argument that the government has to change the numbers in all their systems while also enabling the free and open use of the data published by the government. And yes, initially the field would not be available, but would populate over time as companies come on board. The existing DUNS could also be provided.

I one forum I heard complaint about the $250 charge to obtain a Global LEI vs the free DUNS. This is not a hurdle for any organization wanting to interact with government. it's one of many such charges. If the organization can't afford $250 then likely it doesn't have the capacity to quality for government work/grant in the first place.

To @mboxgirl 's data quality comment.. I manage a small business and am unfortunately very aware of the D&B and DBCC (Dun and Bradstreet Creditability Corp) practices. And lack thereof. D&B makes money selling company information, business credit reports, etc. By requiring everyone to have a DUNS, the government further enables their business model. What D&B would like for every company to do is to submit financial reports to them; they bring this up at almost every interaction with them talking about scoring. That's the only way to really get your score up (in addition to paying DBCC $1500/year to get D&B to update their records with trade references). So they want to get financial data on all these businesses so they can resell it. Ah - No. Hopefully the government will not consider making private companies provide financial information to another private company who's business it is to sell that information.

As usual, comments above are personal comments.

I am co-leading a project through ACT-IAC, http://actiac.org/project/data-act-transparency-federal-financials-project. We're working on a small paper (Executive Report), Unique Identifiers and the Global LEI, that will be publicly released in about a month. Members from Dun & Bradstreet are valued participants in our work (with decades of experience in all these numbers). If they don't get an opportunity to jump in here, I'm sure we'll see some of their insights in our papers.

@philipashlock One more point - Treasury's Office of Financial Research is very involved in the Global LEI. Also check out financialresearch.gov. Matt Reed, OFR Chief Counsel, is the Chair of the Regulatory Oversight Committee (ROC) for the global LEI system.

A couple of interesting articles: "One of the OFR’s most important initiatives to date has been advancing the establishment of a legal entity identifier, a global standard that will enable regulators and companies around the world to, for the first time, quickly and accurately identify parties to financial transactions." http://financialresearch.gov/from-the-management-team/2012/01/19/applauding-progress-on-the-global-lei-initiative/

"The OFR is committed to promoting widespread adoption of the global LEI and we expect that many government agencies across the globe will require its use." http://www.thompson.com/public/newsbrief.jsp?id=3995

The explanation provided with this information indicates that the “parent” information is maintained in SAM. Would the system under design extract the data from SAM in lieu of the agency needing to report the information? [This comment applies to all information maintained in SAM.] This would create efficiencies for those agencies that currently do not maintain particular information and eliminate the need to do so. Some previous materials around the Data Act suggested the use of the DUNS+4. I see this posting does not and I’m glad. Currently in validating against SAM the +4 isn’t an option. Also, we have granted a few organizations where their legal name in SAM differs from their legal name. Feedback from them is that they have attempted correction but are unsuccessful even though they worked the issue with D&B first. Will any provisions be made for organizations attempting such corrections so that awards/reporting actions are not delayed?

I think @GFQCB raises an important point which somewhat relates to other threads. It doesn't make sense for agencies to send a lot of redundant data in the feeds. For example, both NAICS description and NAICS code. The data transmissions should be lean and concise. The should use keys that connect to the authoritative source (like SAM) of information rather than being required to produce redundant data (that creates another point of failure/defect in the system).

AGA established a work group charged with responding to inquiries by the federal government regarding implementation of the DATA Act. The following response is being submitted on behalf of AGA's work group, which is comprised of state, local, tribal and university practitioners from across the country.

Because the DUNS number is a proprietary number issued by a private entity, and because of the restrictions placed on reuse or linking by other users, the DUNS® number is inconsistent with the open data approach of the DATA Act. Unless DUNS significantly changes its approach to sharing information and modifies its pricing model, we believe the federal government should move to another option. The explanation accompanying the proposed definitions indicated that the Federal government will explore potential alternatives to meet the requirement for a unique identifier currently met by use of the DUNS number. In exploring potential alternatives it is important to consider features that are desirable in any new unique identifier. For example, a search capability that enables users of the data to easily find an organization’s unique identifier, and to do so at no charge, is needed. Among other things, this search feature would help reduce the issuance of duplicate identifiers to the same organization. Duplicate DUNS numbers are sometimes issued when a new employee becomes involved in the grants management process and applies for a DUNS number, even though the organization already has one. Ideally, additional controls would be added to promote more consistency and transparency in the issuance, maintenance and access to unique identifiers. We further encourage the federal government to work with recipient organizations to ensure that the transition to a new identifier for recipients is smooth and affordable.

Good points @HelenaSims! One of the counterpoints I've recently heard with regards to another system, this a conversation about the Global LEI, is that the $250 fee for the number assignment is too much for some groups compared with the "free" cost of a DUNS. Have you guys explored cost with the recipient community? How much is too much?

It occurs to me that even though registering for a DUNS is free, that the lack of quality control does itself represent a hidden cost. In your example of multiple DUNS numbers for the same entity for example. I wonder the cost of those issues. I also wonder what mechanisms are in place to prevent another solution (Global LEI or whatever) from suffering the same challenges.

I wanted to chime in to echo some of the comments above, specifically many of the great suggestions put forward by @HerschelC and the comment by @HelenaSims on behalf of the AGA.

I am happy to read that "While key information needed to verify legal businesses may reside in a few providers, options for uniquely identifying those working with the Federal government have expanded. As a result, the Federal government is changing the FAR and 2 CFR to remove the proprietary references of DUNS® and instead refer to a 'unique entity identifier'." This should provide the federal government with flexibility to explore and move towards adoption of non-proprietary, globally accepted standards for entity identification in the future.

That said, I believe that the DATA Act provides an opportunity to move more quickly towards a non-proprietary standard and hope to see these particular elements evolve over time to reflect this.

While I hear and respect resource concerns related to DATA Act implementation broadly and a potential shift away from DUNS more specifically, it is important to reiterate the findings of the 2012 GAO report highlighted by @philipashlock above. The current reliance on DUNS is costing taxpayers millions of dollars a year and restricting competition. It is also potentially keeping the government from exploring more innovative, cost effective, and broadly useful solutions. Costs associated with shifting to a non-proprietary identifier should be offset by savings associated with moving beyond the DUNS monopoly.

Finally, moving to a non-proprietary identifier will vastly increase transparency and ensure that federal spending data is useful in perpetuity. As long as federal spending data is reliant on DUNS we risk losing access to valuable historical information (http://sunlightfoundation.com/blog/2014/10/02/recovery-gov-now-less-useful-than-ever/). As long as the government has to rely on restrictive licenses for this information, it will be harder for the public to have confidence in the information and raise unnecessary hurdles to reuse.

The cost of the DUNS number lock-in are many, but include:

If you want more info about an entity and only have a DUNS number you effectively only have one source: D&B. That means there's no market and no competition
The data that you get back – even if it was originally government data – will be under a proprietary licence, meaning you can't use it in other contexts
This also applies to anyone else too that's using the data with the DUNS numbers in – which undermines all the benefits of open data, open government world, stifling reuse.
These have knock-on effects in government, increasing friction, reducing innovation, duplicating work and costs, creating silos that make government less effective
The same knock-on effects also happen for private-sector and civil society users of the government data, and the opportunity costs to a lack of trust and oversight.

In addition when you have a DUNS number you don't know what it refers to – a legal entity, a corporate group, a Wal-Mart store, or two people in a rented office. Effectively it's just a foreign key that refers to D&B's proprietary database.

It is very important that the approach taken to organisation identification does not undermine the long term goal of providing fully open identifiers, and enabling data to be re-used in diverse ways - including linking with other datasets on companies and organisations.

The proposal to mandate use of the DUNS number, and validate the field against the DUNS syntax, would do this - and so I would strongly oppose this proposal.

Below are notes based on learning working with Organisational identifiers in a number of global open government data standards.

A distributed approach

The approach taken by the International Aid Transparency Initiative and the Open Contracting Data Standard on this issue is to provide a simple {PREFIX}-{ID} pattern for expressing organisational identifiers in open data, that can allow the open data to contain identifiers from different schemes.

For example, if a provider holds an UK Company number of '07444723' for an entity, then they would suffix this onto the codelist entry for UK Companies House, to generate a publishable string ID of:

GB-COH-07444723

Or if they hold an EIN number, they could use:

US-EIN-262852431

In these cases, 'GB-COH' and 'US-EIN' are codelist entries for registration agencies, and '07444723' and '262852431' are the numbers provided and managed by those registration agencies

The method encourages publishers, where they have multiple identifiers for a given organisation, to express all of these (except where limited by Intellectual Property Rights). This means that, over time, an open resource builds up of assertions of the relationship between different identifiers (i.e. it becomes possible to know that Agency A has said 'GB-COH-4388034' and 'GB-CHC-1092719' are the same entity, and for data consumers who trust this to therefore cross-walk their data).

The methodology recognises that some identifiers are better than others (i.e. identifiers that pick out of a unique legal entity, and that can be linked to additional open information, such as addresses, corporate structure and so-on), and so in any implementation, and threshold could be set for the quality of the registration agency used.

At present, the codelist of registration agencies here is maintained by IATI, but there are emerging proposals for a broader collaboration on developing this codelist, and adding more meta-data about where machine-readable data to discover more about the named entities could be discovered.

It is entirely possible in this methodology for B&B to be recognised as a registration agency (probably getting the prefix MISC-DUNS- in the current convention), but it would not rank as a preferable source in most implementation, due to the lack of open information attached to the identifiers.

This methodology was developed in a context of distributed data, where there is not the possibility of mandating that all systems record the same unique identifier, and was designed to help data consumers have the best possible chance of mapping together data from different sources.

However, in the context of laying the groundwork for an open competition about continuing with the DUNS number in the US Govt, moving to an in-house solution, or moving to other external solutions, it offers a number of useful opportunities.

A proposal

The DATA ACT requirements should:

1) Make use of the above Organisational Identifier methodology, requiring that published organisation identifiers in open data consist of:

A prefix identifying the registration agency;
The number assigned by that registration agency;

2) Include additional fields for Other Known Identifiers and Other Known Parent Identifiers in which, using the same {Prefix}-{ID} approach, publishers may place a delimited list of other identifiers they hold for the organisation, including EIN, Company, and Charity registration numbers

Notes

This can be separated from guidance on selecting the best quality identifier for use as the primary Unique Identifier.

In the current content, this is likely this would suggest that DUNS numbers should be preferred (as they give the best chance of finding information on the same organisation across disparate datasets, being already mandated internally as a primary ID).
But, by requiring that where other IDs are held, not derived from D&B Intellectual Property, they should be provided also - third parties are empowered to connect these with additional open data;
In future, if a decision is made to drop the mandates around DUNS numbers inside govt, this DATA ACT standard is robust to change, and does not provide a further lock preventing moves aware from D&B numbers;
The LEI is likely to be recognised as a preferred registration agency in future as it achieves widerspread adoption.

Global Witness’s recommendations include: • Entities bidding on U.S. government contracts should be required to disclose the real people who own or control them (often called “beneficial owners”). • Unless the unique entity identifier captures beneficial ownership information sufficiently, this data element will fall short of its added value in the U.S. Government’s pursuit for transparency, integrity and the safeguarding of American tax dollars. • The U.S. Government should move to a non-proprietary identifier such as the Global LEI or a similar, open system, and it must provide visibility spanning the entire hierarchy of entity ownership and include beneficial ownership information.

I would like to comment on behalf of Global Witness, an international NGO that has been investigating the links between natural resources and corruption, conflict and human rights abuses for 20 years, while analyzing a wide range of related crimes and predatory behavior globally. In doing so, we have found that these crimes often have two things in common: they depend on anonymous companies, and authorities are spending huge amounts of time and money trying to stop them.

The White House lists a number of actions it is taking to promote transparency and stem corruption worldwide in its Global Anticorruption Agenda. One of its six activities is centered upon preventing corrupt actors from using anonymous companies to launder the proceeds of corruption.[1] The Treasury Department also recognizes a gap in transparency in our financial system where financial institutions often do not know the identity of the people behind the businesses that open accounts, thus making it easier for criminals, and the corrupt, to move dirty money through anonymous companies.[2]

International business leaders weighing in on the issue have stated that ending anonymous companies will mean more competitive markets, more stable financial systems and more sustainable development.[3] According to Mo Ibrahim, a member of the B Team, and founder of Celtel International and the Mo Ibrahim Foundation, “[t]here’s absolutely no good reason for someone to have an anonymous company.”[4]

Given the scale of procurement spending in the U.S.—$460 billion in the fiscal year 2013 on federal spending alone—there is significant vulnerability to fraud, waste and abuse.[5] Global Witness is tracking cases that expose how owners of anonymous companies are ripping off innocent people and legitimate businesses around the world in our online interactive map.[6] Case studies in the map also demonstrate the ways that the corrupt and other criminals use anonymous companies to facilitate fraud in government contracting and to further abuses. Some examples include:

• A Pentagon supplier formed two shell companies in Wyoming and pretended they were largely owned by ethnic minorities to win government contracts so that he could profit from supplying fake, substandard tractor trailer parts to the military. • American conspirators used sham companies from North Carolina, Nevada and Tennessee to steal more than $2 million from subcontractors that they tricked into fulfilling U.S. procurement contracts. • Defense contractors used a UAE-based anonymous company to overcharge the U.S. government in a $48 million scheme to supply food and water to troops in Afghanistan.

In order to reduce the ability for fraudsters and other criminals to get away with their crimes, we need to end anonymous company ownership. Specifically when it comes to procurement, where anonymous companies are being used to rip off the government and undercut legitimate business, companies bidding on government contracts should be required to disclose the real people who own or control them (often called “beneficial owners”). The collection and publication of beneficial ownership information in government contracting is critical to ensuring the accurate and timely identification of responsible Federal award partners, the integrity of the award process and the best use of taxpayer dollars.[7]

We are also encouraged by the statement that the “Federal government is changing the FAR and 2 CFR to remove the proprietary references of DUNS and instead refer to a ‘unique entity identifier.’”[8] The stated purpose herein of a unique entity identifier, among other things, is to verify entity information and incorporation information, as well as to create transparency.[9] However, until the unique entity identifier captures beneficial ownership information sufficiently, this data element will fall short of its added value in the government’s pursuit for transparency, integrity and the safeguarding of tax dollars.

In keeping with previous comments, the government should move to a non-proprietary identifier such as the Global LEI or a similar, open system. To achieve transparency and combat corruption costing the government amounts potentially well beyond the expense of moving away from the DUNS system, this identifier must provide visibility spanning the entire hierarchy of entity ownership and include beneficial ownership information.

For any questions please contact Eryn Schornick at eschornick@globalwitness.org or (202) 580-9711.

[1] The White House, "FACT SHEET: The U.S. Global Anticorruption Agenda," September 24, 2014, accessed at https://www.whitehouse.gov/the-press-office/2014/09/24/fact-sheet-us-global-anticorruption-agenda. [2] David S. Cohen, "Treasury takes a big step to fight dirty money," U.S. Department of the Treasury, August 1, 2014, accessed at http://www.treasury.gov/connect/blog/Pages/Treasury-takes-a-big-step-to-fight-dirty-money.aspx. [3] The B Team, "Ending Anonymous Companies: Tackling Corruption and Promoting Stability Through Beneficial Ownership Transparency, The Business Case," January 2015, accessed at http://bteam.org/resources/ending-anonymous-companies-report-published/. [4] Financial Transparency Coalition, "US-Africa Summit: One Day Left, Where Does Financial Transparency Fit In?," August 6, 2014, accessed at http://financialtransparency.org/news/us-africa-summit-one-day-left-where-does-financial-transparency-fit-in/. [5] World Bank Group, "Benchmarking Public Procurement 2015, Pilot report assessing public procurement systems in 10 economies," 2015, accessed at http://rru.worldbank.org/~/media/GIAWB/PublicProcurement/Documents/Reports/Benchmarking-Public-Procurement-2015.pdf. [6] Global Witness, "The Great Rip Off: Anonymous Companies and Their Victims," accessed at http://greatripoffmap.globalwitness.org/#!/. [7] Federal Spending Transparency DATA Act and FFATA Collaboration Space, "Elements: Awardee/Recipient Unique Identifier and Legal Business Name," accessed at https://fedspendingtransparency.github.io/whitepapers/unique-id-business-name/. [8] Federal Spending Transparency DATA Act and FFATA Collaboration Space, "Elements: Awardee/Recipient Unique Identifier and Legal Business Name," accessed at https://fedspendingtransparency.github.io/whitepapers/unique-id-business-name/. [9] Federal Spending Transparency DATA Act and FFATA Collaboration Space, "Elements: Awardee/Recipient Unique Identifier and Legal Business Name," accessed at https://fedspendingtransparency.github.io/whitepapers/unique-id-business-name/.

Strong +1 on using open data here. We should and must avoid lock-in to proprietary data here.

My name is Adam Glass.

I am retired from a long private practice career in structured finance and derivatives law, most recently as Head or Co-head of that practice in the New York office of Linklaters LLP. After leaving private practice I was Chief Counsel of the SEC's Division of Economic and Risk Analysis for four years. During that time I became aware of the needs of statistical and data specialists in government (DERA houses almost all of the economists at the SEC, and is currently budgeted for 160 economist slots), as well as the pervasive need for a well-designed, universally and internationally accepted, quality-controlled, freely available, bulk downloadable legal entity identifier for government financial and other regulatory, private financial and other sector, and academic, use. After the SEC I worked for the Data Transparency Coalition as a senior policy adviser focusing on financial regulatory issues for six months.

Together with our colleagues at the CFTC, a group of us at the SEC were instrumental in including, in one of the SEC's (and CFTC's) first rules regulating US derivatives trading under the Dodd-Frank Act, a permission for swap dealers to use an LEI adopted by an internationally recognized voluntary consensus standards body to identify swap counterparties. The inclusion of this permission in a proposing release was the unique catalyst and action-forcing event that transformed the LEI from a stalled 10-year project that everyone agreed was necessary and desirable, but no one knew how to get off the ground, into a reality.

As someone who was present at the creation of the LEI, I have a vested interest in seeing it used to the maximum extent. But all bias aside, the LEI is perfectly suited to be used as an identifier under the DATA Act. I don't believe that you will find a disinterested expert on government data or open data issues generally who would not say that using an identifier created specially for DATA Act purposes, or using the DUNS number, is (a) wrongheaded, (b) wasteful, (c) a step backwards, and (d) an affront that will cause great weeping and gnashing of teeth among those who understand the issues and want the DATA Act (and federal open data in general) to succeed.

Thank you for considering my comments.

Adam Glass 914 319 5983 adamwglass@gmail.com

5101 River Road, #1814, Bethesda, MD 20814

It is important to point out that the DATA Act, for the first time, centralizes authority over the identifiers used to identify recipients of federal grants, contracts, and other assistance. Until now, no entity has been responsible for leading the entire federal government toward a common, interoperable recipient identifier.

In the absence of any clear, government-wide project for standardizing recipient identification, agencies improvised, and the GSA decided to adopt the proprietary Data Universal Numbering System Number (DUNS Number), which is owned by Dun & Bradstreet, Inc., for its contracting databases. The federal government never decided to require the DUNS Number for all recipients. But by default, without clear policy leadership, the DUNS Number has become the most commonly-used identifier for recipients, starting in procurement and expanding into grants and other assistance.

Now that the DATA Act has vested authority over recipient identification in Treasury and OMB, the federal government can make an intentional and considered decision for the first time.

Data categorized using the DUNS Number cannot be "open" within the meaning of the DATA Act. Users must pay Dun & Bradstreet for licenses in order to incorporate recipient data categorized by DUNS Number. The proprietary nature of the DUNS Number has forced the federal government to cease publishing spending information that is otherwise legally public [http://fcw.com/articles/2014/09/16/who-owns-gov-data.aspx]. Even if licenses to use information categorized by DUNS Number were available free of charge, the mere fact of licensing would still be a barrier to reuse and would frustrate the DATA Act's goal of transforming federal spending into open data. The basic benefits of this transformation - democratic accountability, better internal management through free data sharing, and automated compliance for contractors, grantees, and other recipients - all depend on the free availability and unfettered reuse of spending data.

Treasury and OMB's discussion of the recipient identification issue on their DATA Act and FFATA Collaboration Space [https://fedspendingtransparency.github.io/whitepapers/unique-id-business-name/] is correct to point out the risks of changing identifiers to data integrity and system functionality.

But looking to the future, Treasury and OMB would be mistaken to stick with a proprietary standard, which by definition cannot be accessed freely. Treasury and OMB need not discontinue the use of the DUNS Number immediately. However, they should declare a policy preference for a nonproprietary identifier, take steps toward the reporting of both DUNS and replacement identifiers during a transition period, and set an achievable deadline for the ultimate completion of the switch.

It's heartening to see so many well-informed comments pointing out the problems associated with the government's current reliance on DUNS. Having been a part of efforts at the Sunlight Foundation to highlight this issue, it's a great thing to witness.

Any replacement identifier should be open -- freely available without the need for licensing or other encumbrances. Calls for "more competition" or to decry the D&B "monopoly" miss the mark to some degree: the goal of an identifier system is to provide a stable, useful piece of public infrastructure, not to create a new market. But I take these criticisms to be motivated by the observation that commercial supply of identifier is inherently problematic. This is correct; identifiers should be maintained by a public authority.

Additionally, any viable system must be capable of recording historical changes as entities merge, split and change their names.

I join others in calling for an evaluation of Open LEI and similar efforts. But Treasury and OMB should also evaluate the feasibility of using existing identifier systems, such as TINs, that have been openly available at various points in our nation's history.

“Open Data” and “Transparency” have become watchwords within the government and within the government data stakeholder community - and that’s great thing. It wasn’t so many years ago that transparency was a new concept, both from a data perspective and from an operating principle within government culture.

Rolling out the global use of a standard, i.e. electronic acquisition and the use of the D-U-N-S Number, was not a small task 20+ years ago. For many aspects of the government award cycle, the regulatory framework that was used to accomplish that task is no longer the right way to manage that process. The information technology systems that support government award management, and the program offices that support them, are better able to implement and impact the right behaviors.

Want to ensure that we have a physical address that is accurate? Require all fields in the system and verify its accuracy with an authoritative source.

Want to make sure we always have unique identifier for an entity, with no blanks or placeholders? Require it in the system and verify its accuracy with an authoritative source.

Want to ensure that an awardee is not an excluded party or related to an excluded party? Require those checks and verify its accuracy with an authoritative source.

The removal of references to the D-U-N-S Number within the Federal Acquisition Regulation, and other places where this standard is codified in hard-to-modify regulatory documents, is a change whose time has come. The government should use a system based on its value, not on its inextricability.

So what is that value? Too often the dialogue around unique identifiers comes down to only that -- one string of numbers versus another. The unique identifier conversation, however, is joined equally to the data that accompanies it and the broader mission that data supports -- entity management in government. And this is a conversation about the equal importance of global relationship data; which we call linkage. Understanding the interconnectedness of entities, across the globe, can only be done if we have a comprehensive understanding of the every entity, and keep it up to date, every day. The government made a purposeful selection of the D-U-N-S Number in 1994 through the Electronic Commerce Acquisition Team (ECAT) and with the government-wide rollout of that decision occurring in 2003, the grant community followed suit with OMB guidance that same year, toward the same ends. D&B reciprocated with the provision of a perpetual license for the D-U-N-S Number to government. As the Electronic Commerce Acquisition Team described, the pre-existing, global acceptance of the D-U-N-S Number, was an advantage of the system. It was established in 1963 and has been the global standard since. Any entity that needed to get a number for government purposes would do so free of charge and ultimately the government would retain those numbers perpetually for their use.

Over the last 15 years we have learned first-hand that “entities” are not just companies and contractors. They are expert witnesses and translators, researchers and students, charities and volunteers, and take on many other forms. In 2003 the first volunteer fire department grant solicitation was issued requiring a D-U-N-S Number. I think they all called us the same day…all 40,000 of them. We learned from that day and all of the days that ensued. Over time there have been terrific advancements in the functionality of the supported systems and the business processes using them. And, while we are sensitive to the concern and the perception that prices with D&B have skyrocketed, in actuality, costs have risen as a result of changes in scope.

D&B does not take its position in the government award infrastructure lightly – we consider it an honor and a responsibility - and we look forward to collaborating with government on a future solution that is optimal for all constituents. Domestically, a decade ago, we established a dedicated call center that facilitates customer service needs for all government award recipients in the US. Globally, we partner with our regional data collection centers who are gathering information in 190+ countries. Universally, we hold ourselves to a high standard of performance and service level. We have endeavored to make those experiences positive, and we will continue to push that bar higher.

At the end of the day, the data that D&B provides into the government award management process is operational in nature. We provide high quality, trusted data that conforms to government requirements and process, so that the government can make better decisions and ultimately function better. We perceive millions of changes to entities around the globe on a daily basis, and promulgate government systems with that insight. As much as our role in this environment is to provide a global standard, the D-U-N-S Number, it is as important to provide accurate, timely, complete, and cross-border consistent accompanying information for that entity. We act as data stewards for government and ensure that it’s not just the right data coming out of the process, but that the data is right. Ultimately, of course, this information then needs to make its way to the public and our many stakeholders.

To that end, D&B believes that we have been responsive to the concerns around the proprietary versus non-proprietary – but change occurs at a frenetic pace and we will continue to adapt and work with government to meet the needs of stakeholder community. Over time we’ve made incremental changes to the government’s agreement, making data more transparent. Information, including the D-U-N-S Number, entity name, physical address, and even global parent information, are provided to the public for their own use. The data can be downloaded, stored, studied, written about, criticized and or complimented, and used for any number of internal purposes. The persistent limitation, and subsequent concern, I continue to hear about is that the data cannot be used for commercial purposes. D&B has a proven history of engaging in dialogue to improve this environment and if this continues to be a significant problem for the stakeholder community and for government, we will come to the table to solve it.

I’ve managed this program for D&B supporting the federal government for over a decade, and so my comments here are largely my own personal observations. We’ve worked hard and provided a good solution, and one which the government has embraced time and again; but competition is good for all of us and the government should know and evaluate its options and make the best decision for its operation and for the taxpayer. Dun & Bradstreet will continue to provide the high quality, globally comprehensive, data and solutions we provide today; and we will do so at a great value for government. Better Data. Better Decisions. Better Government.

I also think the exclusive use of DUNS identifiers should be discontinued. There have been several suggestions to evaluate OpenLEIs as a possible replacement for DUNS. Additionally, libraries are working hard on identifier issues. The Library of Congress, the National Archives and Records Administration, as well as the GPO would all be excellent partners in this endeavor. No matter which identifier system is ultimately implemented, it's absolutely imperative for it to be an open data system.

fedspendingtransparency / fedspendingtransparency.github.io