Corporate accountability can mean a lot of things. To some people, it’s tracking the political influence of corporations via campaign contributions and lobbying (using Influence Explorer of course!). For others, it’s monitoring how much the government awards a corporation in contracts, or tracking their EPA violations. For pretty much every definition of the phrase, you need some unique and reliable way to identify a corporation and its related subsidiaries. This is a much more complicated problem than it sounds. To help spread the word about this problem, we’ve created a new microsite that explores the issue. In homage to the great Kevin Bacon, we present, Six Degrees of Corporations.
Right now, the main way that the government tracks contractors is by using DUNS numbers. DUNS numbers are proprietary identifiers managed by Dun and Bradstreet, a business information services firm. By proprietary, I mean that you need to pay a hefty subscription fee to look up information about them, even if you’re the federal government. By hefty, I mean millions of dollars. The federal government spends millions of dollars each year, just to have a company tell them how other companies are legally connected to each other. And what’s more, this data isn’t even sufficient for providing contractor oversight.
Although a contractor must get a DUNS number before contracting with the government, the parent company information is self reported by the contractor. This means that it is very easy for a company to create a new subsidiary with a new DUNS and just not report the parent company information. This makes it difficult or impossible to find out if this company’s parent is on the Excluded Parties List (a blacklist for federal contractors). The GAO noted this in a report, and documents several instances of companies on the Excluded Parties List that get new contracts by using this exact method.
There is potentially another way that the government could keep track of corporate relationships. Each corporation files a form 851 when they file their federal taxes. This form requires them to detail their corporate affiliations, as well as the Employee Identification Numbers (EINs) of those affiliates. EINs are already public for publicly traded companies (via SEC reporting). If they were made public for all corporations, and the data on the form 851 was released, we would have a way for the public to reliably identify a corporation, even through its subsidiaries. This would greatly improve public accountability and government oversight of contracting.
But that’s just one possibility. The truth is, we need to have a serious conversation about this problem and how it ties into better corporate accountability in general, and contractor oversight in particular. So head on over to the Six Degrees of Corporations and read up!