[This is Part I of a 2 Part series. Part I covers the background, acquisition & illegal use of small business contractor information, and aggressive sales tactics used by DNB to peddle the same information. Part II will cover the steps VSBA plans to take to bring this illegal activity to light in order to remedy the situation for small businesses.]
We started this investigation several months ago when one of our members was basically sold a product upgrade by DNB using fear tactics. What we discovered was the equivalent of an old-fashioned ‘shake down’ with all the trimmings… According to Diane Trice, Contracting Officer for GSA Financial and Business Solutions (and confirmed by the GSA Program Manager), the “CCR is a government repository, and information contained within the database cannot be resold by a contractor.”
THE PREACHER: Federal Acquisitions Regulations (FAR)
In order to register your firm for government contracting, you must first obtain a Dun & Bradstreet D-U-N-S® Number:
- – According to the FAR 4.11, prospective vendors must be registered in CCR prior to the award of a contract; basic agreement, basic ordering agreement, or blanket purchase agreement.
- – According to FAR 52.204-7, to register in CCR, a firm must have a Data Universal Numbering System (DUNS) number. The DUNS Number is assigned by Dun & Bradstreet, Inc. (D&B, also [referred to as DNB]) to identify unique business entities.
This number is necessary in order to register your small business with the federal government’s Central Contractor Registration (CCR), the primary database of vendors doing business with the federal government. Federal Acquisitions Regulations (FAR) require all prospective vendors to be registered in the CCR prior to the award of a contract, basic agreement, basic ordering agreement, or blanket purchase agreement.
In order to register your small business with DNB, you must provide the following information at a minimum:
- (i) Company legal business name.
- (ii) Tradestyle, doing business, or other name by which your entity is commonly recognized.
- (iii) Company physical street address, city, state and Zip Code.
- (iv) Company mailing address, city, state and Zip Code (if separate from physical).
- (v) Company telephone number.
- (vi) Date the company was started.
- (vii) Number of employees at your location.
- (viii) Chief executive officer/key manager.
- (ix) Line of business (industry).
- (x) Company Headquarters name and address (reporting relationship within your entity).
After providing this information to DNB, and waiting 24-48 hours, prospective contractors receive a DUNS number. This number is necessary for firms to become registered in the CCR because the name and address information that they input into CCR is automatically matched against the information input into the DNB database in order to complete a profile; if the information does NOT match, the contractor can go no farther in the registration process until it is corrected.
PIMPIN’ AINT EASY: THE RUB…
It is important to note the order of operations here: you most likely did not engage DNB, and subsequently provide it with “validated” company information, because you wanted (willfully) to purchase any of DNBs’ products or services. Rather, it was mandated by the FAR as a pre-cursor to your doing business with the federal government that you provide your company information to the form as a “step” in the process of registering your company in CCR.
Thus, in this case; DNB did not obtain “your” company information through any proprietary method or means, as stated on its website; rather, the firm obtained your company’s info while acting as a “contractor” and “proxy” to the CCR registration process. Had the firm obtained your company information by you coming to the firm directly to engage its products and services, and presumably authorized the firm to subsequently your company’s information, well that would be a different story altogether – but, that is not the case here.
Moreover, since you provided the information as a “step” in the process of registering your company in CCR, you should presumably be able to delete the information form DNB’s databases should you decide to delete it from CCR. However, this is not the case.
When we engaged DNB regarding the information obtained on firms via CCR registration, and its’ subsequent sale of the same; we were told by the company that the it considers that information (your company data) to be their asset to do with what they will. According to Duane Deitrich, Project Director-National Customer Relations, Customer Experience Delivery, DNB:
“D&B collects information on businesses in order to provide insight to our customers who are making commercial decisions, including (but not limited to) risk management and supply management related decisions. Our objective is to provide fair and accurate information. The subject business, through its principals, is often the best source of information, which is why our investigation starts with them. If the business is unable to, or chooses not to, provide D&B with information our research continues with a search of public records and other knowledgeable authorities.”
When pressed on the fact that, in the case of CCR registration, DNB does not generally have a company profile (or any other information in its database) on contractors in the above scenario and might not have obtained such accurate details on the firm without expending money and resources to obtain it; – but, rather, DNB in fact obtained this information at no cost to the company BECAUSE of the procedural mandate of Federal Acquisition Regulations.; – and that, by virtue of this order of operations, DNB has in effect created a ‘marketing-feeder-system’ relationship between it and the federal government due to the role it plays in the registration process; we posed the following query:
Q: “Shouldn’t there be a ‘segregation of information’, and rules applied, by DNB within its databases based upon how the information was acquired?”
To this simple question, we were advised by Mr. Deitrich on Nov. 21, 2011, “I am forwarding your question to our Legal team for their response”. We are awaiting response from DNB legal.
UNWILLING PROSTITUTE: THE SCAM
Here’s how DNB holds your small business information hostage once you input it into its database for the purpose of CCR registration. Once you input your information into DNBs’ database, you are given the option to not receive any marketing calls from the company. However, even if you elect not to, DNB has a way around your election. Shortly after creating your profile, you will receive a call from DNB stating that some ‘mysterious’ firm (conveniently) has made an inquiry about your credit rating. However, because your profile is incomplete, they cannot accommodate the request.
How do you complete your credit profile you ask? It’s simple; you have to purchase one of Dun and Bradstreet’s ‘Credit Builder’ packages. Now, if you don’t purchase one of these packages, your profile will perpetually be incomplete causing an enormity of problems for firms in Construction and other professions that require the purchase of various products and equipment on credit – but who were able to use references alone prior to setting up the DNB profile.
These packages come in three distinct flavors:
- – The $299 per/yr package – this package ‘activates’ your profile and allows you the ability to merely change and update “your” company information without the need to call on their sales personnel. (That’s right, once your small business information is in the DNB database, it is now used as a tickler-file for their sales reps to upsell you on products that you didn’t KNOW you needed in the 1st place).
- – The $599 per/yr package – this is the package that DNB starts out trying to sell you (their money-maker). It includes the $299 per/yr package and also allows you to enter up to 5 companies that you have done business with to build your firms’ credit.
- – The $799 per/yr package – this package includes the $599 per/yr package and also allows you to enter an unlimited number of companies that you have done business with to build your firms credit.
So basically, the DNB, using the federal government as a ‘lead-generator’ of sorts acquires your company info at no cost and then translates that info into annuitized revenue. But wait, it gets better…
The information gathered by DNB is a ‘starter’ file for the profile data maintained and access sold by its subsidiary, Hoovers. You see, as a small business, you are a non-public entity and as such, detailed (or researchable) information is very difficult to acquire – unless the federal government mandates that you provided access to it, that is.
Once your DNB profile is created, it is now also available via one of the following subscriptions:
- – Hoover’s Premium Select Major Markets and FT – $9,995 per year for one to five seats
- – Hoover’s Premium Select – $7,995 per year for one to five seats
- – Hoover’s Plus FT – $7,995 per year for one to five seats
- – Hoover’s Plus – $5,995 per year for one to five seats
- – Hoover’s Pro – $2,995 per year for one to five seats
And guess what, according to DNB; you don’t even own your company data once you input into their database – they do. If you decide that you no longer want your information to be available for sale in any of its databases, tuff luck – your information is now a leverage-able asset on the Balance Sheet of DNB.
So again we ask, “Shouldn’t there be a ‘segregation of information’, and rules applied, by DNB within its databases based upon how the information was acquired?”
We will discuss the Open Ratings monopoly, next steps, provide links to downloads, and what you can do about it in Part II…
The Dun & Bradstreet Corporation: The company, known as DNB (D&B), is one of the world’s leading suppliers of business information, services, and research. Its database contains information on more than 200 million companies in over 200 countries, including the largest volume of business-credit information in the world. The company’s risk management segment (the largest segment, accounting for more than half of D&B’s revenues) sells that information and integrates it into software products and Web-based applications. D&B also offers marketing information and purchasing-support services. The company acquired Hoover’s, the publisher of this profile, in 2003.
Hoover’s offers proprietary business information through the Internet (Hoover’s Online) and through integration with clients’ existing enterprise infrastructure (Hoover’s API). Its database of information includes about 65 million corporations and other entities and 85 million people, and its First Research product covers some 900 industries. Most revenues come from selling subscriptions to a target audience of marketing, sales, and business development professionals. Hoover’s also offers mobile apps (Hoover’s Connect+) and publishes a business blog (Bizmology). It is a subsidiary of Dun & Bradstreet (DNB).
About Open Ratings:
Open Ratings, Inc. provides supply risk management services to companies. Its solutions include supply management solutions, predictive alerts, collaborative research workspace, supplier assessments, and supply base score carding. The company’s services include consulting, monitoring and analysis, reports, training, past performance evaluation, and support services. It serves healthcare, aerospace, automotive, food, and industrial equipment manufacturing markets. The company was formerly known as FairNetworks, Inc. Open Ratings, Inc. was founded in 1999 and is headquartered in Waltham, Massachusetts. Open Ratings, Inc. was a subsidiary of Dun & Bradstreet Corp. It was merged with Dun & Bradstreet, Inc. , a subsidiary of Dun & Bradstreet Corp.
D&B’s most recent GSA Contract expired April 25, 2011
ADDITIONAL INFORMATION SOURCES FOR THIS REPORT
- Sandy Cretsinger
- Central Contractor Registration
- Technical Services Group
- 269-961-4476 phone
- 269-961-7722 fax
- Katherine Rollins
- Contract Specialist
- General Services Administration
- Center for Innovative Acquisition Development (QSAB)
- 2200 Crystal Drive, Suite 706
- Arlington, VA 22202
- (703) 605-2109