Expert Advice

North American Industry Industry Classification System (NAICS)

31 December, 2019

In the federal government procurement system, products and services are classified using several different coding systems. Becoming familiar with these codes will help you select the correct ones to classify and represent your business to the government. The codes will also help you search for appropriate contract bid or proposal opportunities.

One code that has the most impact on a business is the North American Industry Classification System (NAICS) code. NAICS is 6-digit code system that is the standard used by federal agencies in classifying establishments. NAICS organizes establishments into industries according to the similarity in the processes used to produce goods or services.

When establishing a business or when a business is ready for government contracts, the appropriate NAICS code(s) will need to be used to register in the System of Award Management (SAM). A business cannot receive an award from the federal government without being registered in SAM. When setting up a SAM account, the business has to certify the NAICS selected represents the nature of the business. The government will check SAM prior to awarding a contract to ensure the business has certified the NAICS code that the award is classified under.

Another reason for selecting the appropriate NAICS code(s) for the business is that the NAICS code(s) are used by the Small Business Administration to determine small business size standards. If a company has more employees or makes more revenue than the stated size standard, then the business cannot be classified as a small business. If a business wants to certify as a Woman Owned Small Business (WOSB), there is a list of NAICS codes for the certification, and if your NAICS is not listed, then you cannot certify as a WOSB or Economically Disadvantaged Woman Owned Small Business (EDWOSB).

The final reason for selecting the appropriate NAICS code(s) is to help optimize searches for available opportunities in Federal Business Opportunities (FBO), the government point of entry for posting federal solicitations. When using the advanced search features of FBO, the NAICS code can be entered to help narrow down the list of opportunities. Alerts for opportunities can also set up in SAM to send an email when any opportunities matching that NAICS code(s) is posted.

Written by Nanci Pigeon, NORCAL PTAC Procurement Specialist

 

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