Government Is Analyzing Alternatives for Contractor Identification Numbers

What GAO Found

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.

Why GAO Did This Study

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.

Congress 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.