Did you know? … About NAICS

The North American Industry Classification System, or NAICS (pronounced “Nakes”), was developed under the direction and guidance of the Office of Management and Budget (OMB). It’s the standard way that federal statistical agencies classify business establishments for the collection, tabulation, presentation, and analysis of statistical data describing the U.S. economy.

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Written by Julie Fagle
CIRAS Government Contracting Specialist

NAICS are the foundation of doing business with the federal government. It begins with determining your small business size. Small business size standards are categorized by NAICS codes and managed by the Small Business Administration. Each NAICS is assigned a value in one of two areas: average annual receipts over the course of five years or number of employees. If the business falls below the parameters set for the specific NAICS in that industry, the business will be considered small.

Keep in mind that a business can be categorized as small in one NAICS and large in another. For example, consider a company called Mary Jane’s Manufacturing. This business has 501 employees, and therefore would be considered a large business under NAICS 332710 (500 employees) and small under 332999 (750 employees).  The federal government’s supplier portal, System for Awards Management, https://sam.gov/SAM/, automatically configures your size based on the data in your profile. It can be viewed under the representations and certifications section.

In addition, NAICS codes are used to categorize federal government purchases. Before an item is procured, it is assigned a relevant NAICS code. Note, this is not an exact science, and the NAICS code chosen is based on the “best fit” for that procurement. It is very important to do your research and understand how agencies classify the goods and services they buy, to ensure you are not missing out on opportunities.

It’s advantageous for businesses to identify all NAICS relevant to their business in advance of registering in SAM and searching for opportunities/performing market research. Check the federal government’s census website, www.census.gov, for up-to-date and accurate NAICS codes. Completing this research in advance will save you time in your future government contract endeavors.  Please reach out to your local government contract specialist for any additional questions you have about NAICS codes.

For more information, contact Julie Fagle at jafagle@iastate.edu or 319-310-8612.