US Government May Eliminate DUNS Requirement

dun-bradstreet-logoIn 2015, the federal government spent nearly half of a trillion dollars on contracts with private companies—$436,668,103,830, to be exact. Members of the public are free to drill down into this data and track funding going to specific businesses, thanks to a series of policiesdesigned to increase government transparency and accountability by treating information about government spending as open data—machine readable, timely and freely available online.

However, federal contracting policy requires the use of a specific proprietary data standard to keep track of entities receiving federal funds.

Known as the Data Universal Numbering System, or DUNS, the current standard was developed by business information reporting company Dun & Bradstreet. And therein lies a problem: Not only is the use of a proprietary standard antithetical to the principle of an open and transparent government, as it limits the usability and accessibility of the data, but the government has already recognized that requiring the use of DUNS grants Dun & Bradstreet a monopoly on data that uses DUNS numbers, reducing competition and increasing costs.

Federal agencies keep track of companies they do business with through the use of unique identifiers—strings of characters assigned to specific entities, not unlike a Social Security number—to ensure they can easily and accurately report and track spending.

The General Services Administration, the Defense Department and NASA have recently proposed to amend federal contracting policy to eliminate the requirement to use DUNS, which would make data on government spending more transparent and usable by the government and the public alike:

DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to re-designate the terminology for unique identification of entities receiving Federal awards. The change to the FAR will remove the proprietary standard or number. Unique identification of such entities is critical to ensure Federal dollars are awarded to responsible parties, awardees are paid in a timely manner, and awards are appropriately recorded and reported. This is currently accomplished through regulation (i.e., the FAR) using the proprietary Data Universal Numbering System (DUNS®) number from Dun and Bradstreet. This rule proposes to eliminate references to the proprietary standard or number and to provide appropriate references to the Web site where information on the unique entity identifier used for Federal contractors will be located. In addition, the proposed rule establishes definitions of “unique entity identifier”, and “electronic funds transfer (EFT) indicator”.

In recent years, legislation has been enacted (e.g., the Federal Funding Accountability and Transparency Act and the Digital Accountability and Transparency Act) that requires expanded identification of entities working with the Government and the development of standards, processes, and policies to better trace Federal dollars from appropriation to final outcomes or results. Creation and maintenance of data standards will facilitate collection and display of essential information. A data standard for identification of entities receiving Federal awards has been developed as part of the implementation for the Digital Accountability and Transparency Act and is available at http://fedspendingtransparency.github.io/whitepapers/unique-id-business-name/.

Going forward, the Federal Government will establish a transparent process for exploring potential alternatives to existing entity identifiers. Office of Management and Budget (OMB) and Treasury, in collaboration with the General Services Administration and the Award Committee for E-Government will establish a process for considering options, including soliciting information about viable alternatives from and reaching out about nonproprietary alternatives to all sectors, including private companies, nonprofits, and Federal government providers. This process will result in an analysis of alternatives for the unique identification of entities working with the Federal government while maintaining the statutory and regulatory integrity protections for the needs of the various awarding communities (loans, financial assistance, procurement, etc.) as well as transparency communities. The analysis of alternatives will include consideration of costs, implementation considerations, and protections for Federal taxpayers. The analysis of alternatives is anticipated to be completed in Fiscal Year (FY) 2017.

Although the Government is not currently in a position to move away from use of the DUNS number in the short term, elimination of regulatory references to a proprietary entity identifier will provide opportunities for future competition that can reduce costs to taxpayers. The current requirement limits competition by using a proprietary number and organization tomeet the identification need as well as the need for other business information associated with that number.

For years, the Federal Acquisition Regulation has required agencies to specifically use DUNS numbers as unique identifiers despite the fact that nonproprietary identifiers exist that could fulfill the same requirement just as effectively. Every business that contracts with the federal government must have a DUNS number, and the federal government pays Dun & Bradstreet for a license to use this data.

The exclusive use of DUNS numbers is problematic because it limits how the federal government can use its own data. Should the federal government decide to not renews its license to use DUNS numbers, much of its own data would be unusable and lost as a public resource.

This is exactly what happened in September 2014, when the Recovery Accountability and Transparency Board decided not to pay up to $1.4 million to renew its contract with Dun & Bradstreet to use DUNS numbers to track $800 billion federal stimulus spending. When the contract expired Sept. 30, the government, and thus the public, could no longer use this data.

Problems such as this are the very reason federal open data policy requires that government data use nonproprietary formats—when data is in nonproprietary formats, multiple companies could develop tools to use the data.

So when a contract expires, businesses can compete to offer the most cost-effective solutions and the government is not beholden to any one company to use its own data. Eliminating the DUNS requirement in the FAR would finally make rules about federal spending data conform with this open data policy.

However, it will take some time before the government can fully abandon the use of proprietary identifiers.

As of June 2015, the government relied on approximately 380,000 DUNS numbers to track its contracts, and implementing a new and cost-effective system will not happen overnight—the Office of Management and Budget and the Treasury Department will establish a transparent review process to analyze potential alternative systems, and they expect to complete their review in 2017. But if the government decides to remove the DUNS requirement, the government will take a critical step toward making its spending data more open and accessible.

Parts of this appeared on nextgov.com.

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