Transcription
Unique Identification Codes for FederalContractors: DUNS Numbers and CAGECodesL. Elaine HalchinSpecialist in American National GovernmentMay 31, 2017Congressional Research Service7-5700www.crs.govR44490
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesSummaryAn essential element of the federal government’s acquisition system is the capability to identifythe businesses, and other types of entities, that do work for the government. Accurateidentification of potential contractors and incumbent contractors facilitates a host of procurementprocesses while contributing to the transparency of federal government procurement.The federal government uses a proprietary system, Dun & Bradstreet’s (D&B’s) Data UniversalNumbering System (DUNS), to uniquely identify the entities with which it does business. At nocost to the applicant, D&B assigns a DUNS number—a nine-digit unique identification code—toprospective government contractors. (Businesses that are not would-be government contractorsalso may apply for a DUNS number.) The federal government’s use of DUNS, however, is notlimited to the identification numbers. D&B provides, pursuant to its contract with the GeneralServices of Administration (GSA), 7 types of software products and 14 data products that enablethe government to use DUNS for a variety of acquisition-related functions, such as payingcontractors. Furthermore, approximately 80 data systems within the federal government containDUNS information.Congress may have concerns regarding the continued use of DUNS numbers and has expressedinterest in exploring other options. At the request of a Senate subcommittee, the GovernmentAccountability Office (GAO) examined the costs and data restrictions involved with using aproprietary identification system and studied alternatives for identification numbers forgovernment contractors. The implementation of the Digital Accountability and Transparency Act(DATA Act; P.L. 113-101) is accompanied by similar, significant interest within Congress—andwithin the agencies charged with implementing the act—for exploring options for anonproprietary contractor identification system.One or more possible options might involve using an existing, nonproprietary identificationsystem created and maintained by the federal government: the commercial and government entity(CAGE) code system. CAGE codes could be used as a stand-alone system, or incorporated into ahybrid system (e.g., combine CAGE codes with vendor-provided business products and services).The CAGE Branch of the Defense Logistics Agency (DLA) assigns the five-character alphanumeric identifiers to entities located in the United States and outlying areas.Regulatory changes in 2014 and 2016 potentially pave the way for the government to adopt a newsystem. First, in 2014, a rule was adopted in the Federal Acquisition Regulation (FAR) requiringprospective contractors to obtain CAGE codes. This rule also requires the contractor to provide tothe government, if applicable, the name and CAGE codes of its immediate owner and its highestlevel owner. Second, a final rule issued in 2016 removed all references to the Data UniversalNumbering System and DUNS numbers from the FAR and inserted the terms unique entityidentifier. The preface to the proposed rule noted that the government is not ready to eliminateDUNS numbers at this time, but that removing references to a proprietary system and identifier“will provide opportunities for future competition that can reduce costs to taxpayers.”In early 2017, GSA initiated a process for exploring alternatives to DUNS by posting a requestfor information (RFI) for entity identification and validation services on the Federal BusinessOpportunities (FedBizOpps) website. GSA’s tentative schedule is to issue a solicitation insummer 2017 and award a contract prior to the expiration of its contract with Dun & Bradstreet,which will occur in June 2018.Congressional Research Service
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesContentsIntroduction . 1Data Universal Numbering System . 3Commercial and Government Entity (CAGE) System and Codes . 5Brief Comparison of DUNS and the CAGE System . 6The Federal Government’s Reliance on DUNS and Efforts to Explore Alternatives . 6GAO Examination of the Issue . 8The DATA Act and Unique Identifiers . 10Individual Agencies That Use Dun & Bradstreet’s Products and Services .11Changes to the FAR. 12GSA Explores Alternatives . 13New Requirement to Use CAGE Codes . 13FiguresFigure 1. Examples of DUNS Numbers . 4Figure 2. Examples of CAGE Codes . 6TablesTable 1. Comparison of DUNS and the CAGE System . 6Table 2. Federal Agencies with Entries in FPDS Involving Dun & Bradstreet .11AppendixesAppendix A. Dun & Bradstreet Subscription Services Purchased by GSA . 15Appendix B. Generic Entity Identifiers . 17ContactsAuthor Contact Information . 18Congressional Research Service
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesIntroductionHundreds of thousands of businesses and other entities1 provide supplies, equipment, and servicesto federal agencies each year through procurement contracts (contracts).2 Accurate identificationof prospective and incumbent government contractors (or vendors) facilitates the federalgovernment’s procurement process, helping to ensure contractors are paid, supporting contractadministration activities, enabling the identification of corporate families (e.g., a corporation andits subsidiaries), and, generally, contributing to the transparency of federal governmentprocurement. To aid in accurately identifying the entities with which it does business, the federalgovernment relies on a proprietary system, Dun & Bradstreet’s (D&B’s) Data UniversalNumbering System (DUNS). Dun & Bradstreet assigns unique identification codes known as“DUNS numbers” to prospective federal government contractors. The federal government hasused DUNS since at least the early 1990s to meet its needs for an identification system andrelated services.31Although, generally, the definition of the term entity may be considered to be broader than the term business, theseterms are used interchangeably, unless noted otherwise, in this report. The definition of entity is provided here toillustrate that many different types of organization may, and do, provide goods and services to the federal governmentpursuant to contracts. “The term ‘entity’- (A) includes, whether for profit or nonprofit-(i) a corporation; (ii) anassociation; (iii) a partnership; (iv) a limited liability company; (v) a limited liability partnership; (vi) a soleproprietorship; (vii) any other legal business entity; (viii) any other grantee or contractor that is not excluded bysubparagraph (B) or (C); and (ix) any State or locality; (B) on and after January 1, 2009, includes any subcontractor orsubgrantee; and (C) does not include-(i) an individual recipient of Federal assistance; or (ii) a Federal employee.”Section 2(a)(2) of P.L. 109-282, Federal Funding Accountability and Transparency Act of 2006, as amended by P.L.110-252. Colleges and universities, Native American tribes, and local and state governments are examples of differenttypes of entities that may do business with the federal government.2A procurement contract is a “contract between the government and a private party to provide supplies or services(including construction).” The Government Contracts Reference Book: A Comprehensive Guide to the Language ofProcurement, ed. Ralph C. Nash, Jr., Steve L. Schooner, Karen R. O'Brien-DeBakey, and Vernon J. Edwards, 3rd ed.(Riverwoods, IL: CCH, 2007), p. 450.3U.S. Department of Defense, U.S. General Services Administration, and National Aeronautics Space Administration,“Federal Acquisition Regulation; Submission for OMB Review; Use of Data Universal Numbering System (DUNS) asPrimary Contractor Identification,” 71 Federal Register 26470, May 5, 2006, at 4212.pdf. For a period of time, the federal government had its own identification system, theContractor Establishment Code (CEC) system. A Federal Register entry dated July 11, 1989, stated that entitiescompeting for federal government contracts in excess of 25,000 would be asked to provide their CECs to thecontracting agency. U.S. Department of Defense, U.S. General Services Administration, and National Aeronautics andSpace Administration, “Federal Acquisition Regulation (FAR); Miscellaneous Amendments,” 54 Federal Register29279, July 11, 1989. A final rule, which appeared in the December 21, 1992, Federal Register, implemented “the newGovernment-owned, contractor-operated contractor establishment code (CEC) numbering system to identify Federalcontractors.” The preface to this rule stated that the CEC system “replaces the Dun and Bradstreet Data UniversalNumbering System which is currently being phased out.” U.S. Department of Defense, U.S. General ServicesAdministration, and National Aeronautics and Space Administration, “Federal Acquisition Regulation; ContractorEstablishment Code,” 57 Federal Register 60572, December 21, 1992. However, beginning in 1996, subsequentFederal Register entries revealed that the federal government had chosen DUNS over the CEC system. An interim ruleissued on December 20, 1996, included the following text in its preface: The amendments to the FAR effected by thisrule “replace the Contractor Establishment Code (CEC) with the Data Universal Numbering System (DUNS) numberas the means of identifying contractors in the Federal Procurement Data System.” U.S. Department of Defense, U.S.General Services Administration, and National Aeronautics and Space Administration, “Federal AcquisitionRegulation; Use of Data Universal Numbering System as Primary Contractor Identification,” 61 Federal Register67412, December 20, 1996. This interim rule was adopted as final with changes; the effective date of the final rule wasApril 24, 1998. U.S. Department of Defense, U.S. General Services Administration, and National Aeronautics andSpace Administration, “Federal Acquisition Regulation; Use of Data Universal Numbering System as the PrimaryContractor Identification,” 63 Federal Register 35, February 23, 1998. This excerpt from a 2006 Federal Register entrysummarizes the government’s reasoning regarding its decision to use DUNS.(continued.)Congressional Research Service1
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesWhereas the government’s continued use of DUNS was supported by the executive branch asrecently as 2006, as documented in a Federal Register notice,4 the federal government has begunexploring alternatives to DUNS and DUNS numbers again. Congress and the executive branchshare an interest in containing costs; acquiring, or possibly developing, a nonproprietaryidentification system; ensuring continued access to, if not outright ownership of, data contained inthe identification system; and transparency. Notable legislative initiatives in this area haveincluded passage of the Federal Funding Accountability and Transparency Act (FFATA; P.L. 109282) and the Digital Accountability and Transparency Act (DATA Act; P.L. 113-101). Thegovernment’s change in perspective is reflected in separate, though possibly coordinated, effortsby the General Services Administration (GSA), and the Office of Management and Budget(OMB) and the Department of the Treasury, to examine possible alternatives to DUNS. TheTreasury Department-OMB effort is related, as discussed below, to implementation of the DATAAct.The following two sections, “Data Universal Numbering System” and “Commercial andGovernment Entity (CAGE) System and Codes,” provide basic information about these twosystems, respectively. The final section discusses the federal government’s reliance on DUNS,interest in and exploration of alternatives to DUNS, and government actions that possibly couldpave the way for the adoption of an alternative system, or a hybrid system that includes DUNS.The CAGE system, which is an existing, federal government identification system, may be acandidate for either option.This report focuses on identification numbers for acquisition and acquisition-related purposes thatgovernment contractors, generally, are required to have. It does not address taxpayeridentification numbers (TINs), which government contractors also are required to have and whichare used by the Internal Revenue Service (IRS) in the administration of tax laws.5 This report also(.continued)“In the late 1980’s and early 1990’s, the Government maintained a proprietary database ofContractor Establishment Codes (CEC) numbers. This database attempted to recreate the D&B[Dun & Bradstreet] world wide database on a much smaller scale. This was a Government-ownedcontractor-maintained database. The contractor who was awarded the responsibility to maintain thedatabase was D&B. After review of the project in 1994, the Government chose again to use thecommercially available DUNS numbers to fulfill its need. The decision was based on severalfactors, most notably the fact that the DUNS number is broadly used, both domestically andworldwide. Since the E-Government Act of 2002 [P.L. 107-347], the Government has chosenseveral guiding principles. One of them is to use commercial practices wherever feasible. D&B notonly produces a unique number, but they also have a mature business providing contractorassociation. The Government uses the information about one contractor and their relationship toother contractors for reports and we have no desire to compete with that line of work. Therefore,the decision to use D&B is still strongly supported by the Administration.” U.S. Department ofDefense, U.S. General Services Administration, and National Aeronautics Space Administration,“Federal Acquisition Regulation; Submission for OMB Review; Use of Data Universal NumberingSystem (DUNS) as Primary Contractor Identification,” 71 Federal Register 26470, May 5, 2006.4Ibid.548 C.F.R. §4.902(a); U.S. Department of the Treasury, Internal Revenue Service, “Taxpayer Identification Numbers,”at yers/Taxpayer-Identification-Numbers-TIN. The TIN “may beeither a Social Security Number or an Employer Identification Number.” 48 C.F.R. §52.204-3(a). The FAR is theFederal Acquisition Regulation. It consists of Parts 1-53 of Title 48 of the Code of Federal Regulations. Using GSA’sreference as an example, FAR §6.302-1(a)(2) is the same section as 48 C.F.R. §6.302-1(a)(2). Generally, it is commonpractice to refer to the FAR in the text while citing Title 48 of the C.F.R. in footnotes.Congressional Research Service2
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE Codesdoes not cover other types of recipients of federal money (e.g., grant award recipients) who arerequired to obtain DUNS numbers.6Data Universal Numbering SystemCreated by Dun & Bradstreet in 1963, DUNS is “a unique global business identification system.”7The system includes DUNS numbers, which are “nine-digit non-indicative numberingsequence[s] and [are] assigned at the lowest organizational level.”8 As a non-indicativenumbering sequence, a nine-digit DUNS number does not in and of itself have any meaning. Thelowest organizational level means a “business location[] with a unique, separate and distinctoperation.”9 That is, each business location that is a unique, separate, and distinct operation isassigned its own DUNS number.10 However, some entities have the same, or similar, names.11 SeeFigure 1 for an illustrative list of companies and their respective DUNS numbers. A businessretains its DUNS number throughout its lifecycle: DUNS numbers do not have an expiration dateand D&B neither reissues nor reassigns DUNS numbers.12Generally, prospective government contractors are required to register in the federal government’sSystem for Award Management (SAM) prior to the award of a contract,13 and an entity must havea DUNS number in order to register in SAM.14 SAM is “the primary Government repository for6OMB established, in 2003, a requirement for grant applicants to obtain a DUNS number. The June 27, 2003, policydirective requires grant applicants to provide a DUNS number “when applying for Federal grants or cooperativeagreements on or after October 1, 2003.” U.S. Office of Management and Budget, “Use of a Universal Identifier byGrant Applicants,” 68 Federal Register 124, June 27, 2003, p. 38403, at 6356.pdf. This policy applies to all applicants for grants or cooperative agreements, except “[i]ndividualswho would personally receive a grant or cooperative agreement award from the Federal government apart from anybusiness or non-profit organization they may operate” and except “[a]ny applicant that receives an exemption, or anapplicant under a program that receives an exemption.” Only OMB may grant exemptions. Ibid., pp. 38404-38405.7Dun & Bradstreet, “The D&B D-U-N-S Number,” August 2013, at ight/duns number overview 2011.pdf.8Dun & Bradstreet, “The D&B D-U-N-S Number,” August 2013, at ight/duns number overview 2011.pdf. Dun & Bradstreet introduced the Data Universal Numbering System in1963 as a means “to identify businesses numerically for data-processing purposes,” which “helped bring businessinformation into the computer age.” Dun & Bradstreet, “Dun and Bradstreet Company History,” Ibid., p. 1. Under certain circumstances, a generic DUNS number may be used for reporting data to FPDS. SeeAppendix B for additional information.11For example, some of the larger, well-known companies, such as Boeing, Lockheed Martin, and Raytheon, havemultiple lines of business, divisions, or subsidiaries with the same name, or similar names.12Dun & Bradstreet, “The D&B D-U-N-S Number,” p. 2.1348 C.F.R. §4.1102(a).1448 C.F.R. §4.605(b); 48 C.F.R. §52.204-7; 8 C.F.R. §52.204-13; U.S. General Services Administration, System forAward Management User Guide, June 26, 2015, v3.3, p. 82, at https://www.sam.gov/sam/transcript/System for Award Managementv3.1 v1.pdf. Entities involved in certain types of procurements made by the federalgovernment are not required to obtain a DUNS number. Exceptions include classified contracts, contracts to supportunusual or compelling needs, “[c]ontracts with individuals for performance outside the United States and its outlyingareas,” and purchases under the micro-purchase threshold when a government purchase card is used as “both thepurchasing and payment mechanism.” 48 C.F.R. §4.1102(a)(1), (2), (4), and (5). A classified contract is “any contractin which the contractor or its employees must have access to classified information during contract performance. Acontract may be a classified contract even though the contract document itself is unclassified.” 48 C.F.R.§2.101(b).Generally, the micro-purchase threshold is 3,500, but it differs for procurements involving construction,services subject to Service Contract Labor Standards (see Chapter 67 of Title 41 of the U.S. Code), and the acquisition(continued.)Congressional Research Service3
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE Codesprospective Federal awardee and Federal awardee information and the centralized Governmentsystem for certain contracting, grants, and other assistance-related process.”15A prospectivegovernment contractor may request a DUNS number through an online portal.16 A company ororganization that is required by the federal government to obtain a DUNS number for the purposeof competing for a contract does not pay a fee for its DUNS number.17Figure 1. Examples of DUNS NumbersSource: U.S. General Services Administration, “System for Award Management,” at https://www.sam.gov.D&B’s system, in addition to providing the means for uniquely identifying contractor entities,may be used to “roll-up Government procurements to the ultimate parent organization to show thecorporate family receiving U.S. obligations” and contains business-related information.18Examples of the types of information contained in the Data Universal Numbering System includenumber of employees, sales volume, line of business, net worth amount, foreign ownership, liens,history of business, criminal activity indicator, business name change, legal structure, judgments,bankruptcy indicator, credit rating, and parent relationship.19 DUNS information and servicesused by the federal government include the names, addresses, and parental linkages of businessesand “logic, corporate research, and corporate business linkage maintenance.”20(.continued)of supplies or services “to be used to support a contingency operation or to facilitate defense against or recovery fromnuclear, biological, chemical, or radiological attack.” 48 C.F.R. §2.101(b).1548 C.F.R. §2.101(b). SAM is available at https://www.sam.gov/portal/SAM/##11.16The portal is available at http://fedgov.dnb.com/webform.17Dun & Bradstreet, “Welcome to the Online DUNS Request Portal,” at http://fedgov.dnb.com/webform.18U.S. Department of Defense, U.S. General Services Administration, and National Aeronautics and SpaceAdministration, “Federal Acquisition Regulation; Updates to Contract Reporting and Central Contractor Registration,”77 Federal Register 69715, November 20, 2012. (Italics in original.)19Dun & Bradstreet, “D&B Overview,” hand-out, December 18, 2013, p. 26.20U.S. General Services Administration, Office of Administrative Services, “Intent to Sole Source Notice,” solicitationnumber DG03-00-DB-IAE, April 21, 2010 (posted date), at https://www.fbo.gov/?s opportunity&mode form&id 375baf9eadc681452096b67a463a15db&tab core& cview 0.Congressional Research Service4
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesCommercial and Government Entity (CAGE) Systemand CodesThe Department of Defense (DOD) created the CAGE system between 1945 and 1950; itsoriginal purpose was to catalog various items (e.g., part numbers, National Stock Number, anddrawings).21 Subsequently, other purposes were added, such as using CAGE codes to identifyvendors.22 The CAGE Branch of the Defense Logistics Agency (DLA), which is the onlyauthorized source of these codes, assigns CAGE codes to entities located in the United States orits outlying areas.23 A CAGE code is a five-character alpha-numeric identifier that belongs to anonproprietary system created by DOD. Similar to DUNS numbers, some contractors may havethe same, or similar, names. See Figure 2 for an illustrative list of companies and their respectiveCAGE codes. DLA assigns CAGE codes “per legal entity at individual physical addresses (i.e.,the same entity at the same physical address will not be assigned two or more CAGE codes).” 24There is no cost for obtaining a CAGE code.2521Telephone conversation with Defense Logistics Agency, Commercial and Government Entity Branch, February 17,2016.22Ibid.23U.S. Department of Defense, Defense Logistics Agency, “Commercial and Government Entity (CAGE),” athttp://www.dlis.dla.mil/cage welcome.asp; 48 C.F.R. §4.1801. Entities located outside the United States may obtain aNorth Atlantic Treaty Organization CAGE (NCAGE) code from their country’s NATO Codification Bureau. An entitywhose country is neither a NATO member nor a sponsored nation may request an NCAGE code from the NATOSupport Agency (NSPA). An NCAGE code is required in order to register in the federal government’s SAM. U.S.Department of Defense, U.S. General Services Administration, and National Aeronautics and Space Administration,“Federal Acquisition Regulation; Commercial and Government Entity Code,” 79 Federal Register 31187, May 30,2014; 48 C.F.R. §204.7202-1(b)(1).24U.S. Department of Defense, Defense Procurement and Acquisition Policy, Procedures, Guidance, and Information(PGI) §204.1870-2(a)(1), at http://www.acq.osd.mil/dpap/dars/pgi/pgi pdf/current/PGI204 18.pdf. “The onlyexception to this rule is when an entity has a registration in . SAM with multiple EFT [electronic funds transfer]addresses identified by multiple DUNS 4 numbers. In this case, each DUNS 4 number record is assigned a separateCAGE code to assist in correct processing of payments.” DUNS 4 is an “option for organizations with multipledivisions or operating units at the same location. The vendor can add four additional characters (alphanumeric) of theirchoice to their DUNS to identify each additional account. Each DUNS 4 will be assigned an individual CAGE Codefor contract and remittance purposes only.” U.S. Department of Defense, Defense Logistics Agency, “Commercial andGovernment Entity (CAGE) Frequently Asked Questions (FAQs),” at GE/faqs.aspx.25U.S. Department of Defense, Defense Logistics Agency, “Commercial and Government Entity (CAGE) FrequentlyAsked Questions (FAQs),” at GE/faqs.aspx.Congressional Research Service5
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesFigure 2. Examples of CAGE CodesSource: U.S. Department of Defense, Defense Logistics Agency, “Logistics Information Service,” athttps://cage.dla.mil/search//begin search.aspx.Brief Comparison of DUNS and the CAGE SystemTable 1 compares selected features of DUNS and the CAGE system.Table 1. Comparison of DUNS and the CAGE SystemFeatureDUNSCAGE SystemFormat of identification codeNine digitsFive alpha-numeric charactersCriteria for assignment of anidentification codeDUNS number is assigned to thelowest organizational level.CAGE code is assigned per legalentity at individual physicaladdresses.Cost for prospective and activegovernment contractors to obtainidentification codeNoneNoneProprietary system?YesNoSystem ownerDun & BradstreetDefense Logistics AgencySource: Congressional Research Service.The Federal Government’s Reliance on DUNS andEfforts to Explore AlternativesDUNS numbers, and the information associated with them, facilitate the smooth, efficientoperation of the government’s acquisition system. The related products and services that thegovernment obtains from D&B are also integral to the functioning of various procurementprocesses and activities. (See Appendix A for brief descriptions of the software and data productsthe federal government purchases from D&B.) Using DUNS, the federal government is able, forexample, to uniquely identify the entities that perform work for, or provide supplies or equipmentto, agencies; verify contract awardees’ information; and track the amount of funds obligated tocorporate families. In addition to GSA, which is responsible for many of the federal government’sacquisition systems that include or use DUNS numbers and which awards contracts to D&B forthe use of DUNS, various federal agencies purchase a variety of D&B services.Congressional Research Service6
Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE CodesOn June 29, 2010, GSA awarded a sole source contract, under the authority of FAR §6.3021(a)(2), to Dun & Bradstreet for the use of its Data Universal Numbering System.26 The contractconsists of a three-year base period and five one-year option periods. The effective date of thecontract was June 30, 2010; the completion date for the base period was June 29, 2013; and theestimated ultimate completion date (if all five option periods are exercised) is June 29, 2018. Thepresent value of the contract, including the base period and all option periods, if exercised byGSA, is 135,111,119.67.27Concerns regarding the cost of using a proprietary service and related issues were publicized in a2012 Government Accountability Office (GAO) report, which also examined possible alternativesto DUNS and anticipated challenges in replacing DUNS with a different identification system.(See below for a discussion of the GAO report.) GSA explains, in a special notice it posted on thegovernment’s Federal Business Opportunities website, why the federal government relies onDUNS numbers and D&B services.The Federal Government, GSA, and Integrated Acquisition Environment have aregulatory mandate to identify and report on corporate relationships and linkages usingthe DUNS Number as the Contractor Identification Number for Federal Contractors, asset forth in FAR 4.605(b). D&B is the only source that can provide the
May 31, 2017 · Unique Identification Codes for Federal Contractors: DUNS Numbers and CAGE Codes Congressional Research Service 1 Introduction Hundreds of thousands of businesses and other entities1 provide supplies, equipment, and services to federal agencies each year through procurement contracts (contracts).2 Accurate identification of prospective and incumbent government contractors (or vendors .
