In 1997, the United States, Mexico, and Canada developed the North American Industry Classification System (NAICS). Their goal was to replace the Standard Industry Classification System with a new system for North America. NAICS codes create common definitions for specific industries. As a result, federal statistical agencies can more easily analyze and compare economic activity. Since the creation of NAICS, state, local, and federal agencies have adopted the system for a wide range of purposes.
Breaking Down the NAICS Code Structure
The official NAICS code structure consists of a two-through-six-digit hierarchy of classifications with five levels of detail:
- The two-digit code indicates the economic sector
- The three-digit code specifies the economic subsector
- The four-digit code includes the industry group
- The five-digit code denotes the specific NAICS industry
- The six-digit code provides country-specific detail for the national industry
To help visualize how this works, here’s an example of a NAICS code broken down:
Understanding NAICS Codes in Government Contracting
The full, six-digit primary NAICS code plays a pivotal role in federal government contracting. NAICS code applications span from registering to do business with a government agency to determining your business size and conducting market research. With such a wide breadth of uses, it can be difficult to get far without understanding and knowing your NAICS codes.
- Government Market Research
- Business Size-Determination
- System for Award Management Registration
- GSA Schedule NAICS Code Lookup
Government Agency Market Research
Whether your company is just getting started in the government market, evaluating the addition of new offerings, or looking to reassess the market, NAICS codes provide an excellent starting point for government market research. This is because the federal government utilizes the NAICS code system to classify government contract opportunities and awards. Researching NAICS codes can help you determine:
- How much the government spends on your category of products or services
- Which agencies are spending the most on your category of products or services
- Which companies are currently selling your category of products or services to the government
- If there are cyclical spending trends associated with your category of products or services
Business Size Determination
The U.S. Small Business Administration (SBA) uses your average annual receipts and number of employees, which vary depending on your NAICS code, as a basis for determining the size status of your business. This is important because your business size impacts whether you qualify for small business set-asides, subcontracting, and various government contracting programs.
To see the definition of annual receipts and average employees, you can view the common terms section on the SBA’s website here. To see if your company qualifies as a small business for government contracting, view the table of size standards or use SBA’s Size Standards Tool.
SAM Registration and Code Entry
In order to do business with the federal government, you’re required to register on the System for Award Management (SAM.gov). Part of the registration process involves entering the NAICS code or codes associated with your products or services. You can list multiple NAICS codes on your SAM registration, however you will have to designate a primary NAICS. While companies should register at https://www.sam.gov, you can find more information on how to register here.
NAICS Code GSA SIN Lookup
The GSA Multiple Award Schedule Contract (GSA Schedule) maps all product and service categories, known as Special Item Numbers (SINs), to one or multiple NAICS codes. While there are over 1,000 NAICS codes, less than 230 can be offered through the GSA Schedule. You can learn more about the GSA Schedule here and conduct a NAICS code lookup in the chart below to see if and how your NAICS codes map to the GSA Schedule.
Identify Your NAICS Codes
NAICS Code Lookup
The Census Bureau is the official government source for information on NAICS codes. To view an FAQ, download the full list of codes, or search a NAICS code, visit the Census Bureau website.
You can use the search feature to look up keywords related to your particular industry and find the most applicable NAICS code(s). We should note, the Census Bureau reviews the North American Industry Classification System every five years to evaluate the need for updates. The latest release was in 2017, and the 2022 update is currently in progress.
As you explore the available NAICS codes, keep in mind that the classification system was designed to collect and analyze statistical data on the economy. Because it isn’t tailored to government procurement, it may take some time to identify the most appropriate code(s) for your business.
