Understanding How NAICS Codes Are Used in Federal Contracting

If you registered in SAM, you had to supply one or more North American Industry Classification System (NAICS) codes for your business. And if you’ve won a federal contract, you’ve seen the contract classified with a NAICS code. 
See Tip of the Month below for full NAICS Codes article.
 

Proposed 8(a) Revisions

The U.S. Small Business Administration has proposed a slate of revisions to its regulations governing the 8(a) Business Development program, joint ventures, affiliation, and more. 

Read the complete proposed rule here and a summary of some of the more notable changes here. If you would like to learn more about the 8(a) Program or receive assistance with an application, schedule time to talk with your PTAC counselor. 

Rochester Veteran-Owned Company Honored by New York State Industries for the Disabled
 

Sheen and Shine, Inc. was presented with the Corporate Partner of the Year award from the New York State Industries for the Disabled (NYSID) for providing meaningful work to individuals with disabilities.

Sheen and Shine is a Rochester-based Service-Disabled Veteran-Owned Company engaged in providing Facility and Janitorial Services for 40 Years. They are also an MBE (Minority Business Enterprise), DBE (Disadvantaged Business Enterprise), and DOBE (Disabled Owned Business Enterprise) certified.

Please do not hesitate to contact SSI regarding this compelling story. Thank you.

Link to Press Release

SBIR/STTR is Reauthorized

The SBIR and STTR programs have just been Congressionally reauthorized and will continue to run through September 30, 2025. 

 Click here for the Official DoD SBIR Website 

*See calendar of events for upcoming SBIR/STTR training opportunities

In this reauthorization, Congress has brought about some important programmatic changes, and the agencies will soon be announcing what those changes are, and how they will be implemented. The SBIR and STTR programs will remain strong and vital to our country and the small business community.

Read more here

Navy to Break Up Contracts to Increase Small Business Utilization  

This year, the Navy will put terms into five contracts to incentivize prime contractors to meet their workshare agreements, as well as terms that allow the service to withhold payment if the company fails to live up to the agreements.

“Making sure the contracting officers are honoring the enforcement of contracts has turned its head to be more of an important factor within the Navy in areas where we see to there is a degradation,” Smith told Federal News Network.

After the five initial contracts this year, Smith said the Navy will look to use the new carrots-and-sticks approach more broadly across the service.

Read more here


Jimmy Smith is the director of the Office of Small Business programs for the Department of the Navy.

$97.46M in Contract Awards for PTAC Small Business Clients

Monroe County Finger Lakes PTAC small business clients finished out FY22 in strong fashion when it comes to government contracting. The MCFL PTAC fiscal reporting year runs from 09/01 to 08/31, during which period active PTAC small business clients reported $97.46 million in government contracts. The majority of those contracts were direct or prime federal or defense contracts. Congratulations!

New Territory

MCFL PTAC is excited to announce that the Department of Defense has increased its territory to include shared coverage of Cayuga and Onondaga counties. This is effective immediately. We look forward to bridging contracting opportunities for small businesses throughout our territory.
 

MCFL PTAC is hiring!

Come join our team! The MCFL PTAC is seeking an individual with government contracting experience and business development skills. Salary is commensurate with experience. Here is the link to the job description – scroll down to Procurement Advisor job opening. Take a look and see if you think you are a fit!

AFVentures Weekly Webinar Series
Date: Thursday, Nov 3 & Nov 17
Click here to register

These events are open to small businesses and government. Attend this weekly webinar hosted every Thursday at 12pm EST to learn about AFVentures Topics and Q&A about our program!

Cyber Circuits: NSA Shines the Spotlight on DIB Security
Date: Friday, Nov 4 
Click here to register
 

Understand How to do Business with DLA Land and Maritime
Date: Wednesday, Nov 9 
Click here to register

SBIR/STTR Webinar: Understanding the NIH SBIR/STTR Omnibus
Date: Thursday, Nov 10 
Click here to register
 

Understanding How NAICS Codes Are Used
in Federal Contracting

If you registered in SAM, you had to supply one or more North American Industry Classification System (NAICS) codes for your business. And if you’ve won a federal contract, you’ve seen the contract classified with a NAICS code. 

These six-digit codes are an important part of federal government contracting. However, it’s not always clear exactly how they’re used by government and industry alike – and that lack of clarity can be costly for contractors. So how, exactly, are NAICS codes used in federal contracting? Let’s take a look!

How Does a Contracting Officer Pick a Solicitation's NAICS Code?

Under Federal Acquisition Regulation (FAR) 19.102, except in the case of certain multiple-award acquisitions, a Contracting Officer must assign one – and only one – NAICS code to each solicitation, contract, and order. 

The Contracting Officer cannot just pick a code at random. Rather, per the FAR, he or she "shall determine the appropriate NAICS code by classifying the product or service being acquired in the one industry that best describes the principal purpose of the supply or service being acquired." While the Contracting Officer may consider several factors, and some element of subjectivity may exist, "a procurement is usually classified according to the component that accounts for the greatest percentage of contract value." 

Why Does the Contracting Officer's NAICS Code Choice Matter?

For small business set-asides and solicitations restricted to socioeconomic subcategories of small businesses, such as 8(a) and HUBZone set-asides, the Contracting Officer's NAICS code selection plays a major role in establishing the competitive field. The U.S. Small Business Administration assigns a size standard to each NAICS code. When the Contracting Officer selects the appropriate NAICS code, the corresponding size standard automatically applies to the solicitation. The size standard, in turn, determines which companies are eligible for the contract. 

If you're curious about the small business size standards corresponding to each NAICS code you work under, check out the Size Standards Table on the SBA's website. 

How Do I Determine My Business's Primary NAICS Code?

Contracting Officers aren't the only ones who have to figure out which NAICS code to use. When a contractor registers in SAM, the contractor must identify its primary NAICS code. But how, exactly, do you do that?

Fortunately, there's a place to find the answer: the NAICS Manual. Published by the Census Bureau, the NAICS Manual provides descriptions for each NAICS code to help you pick the right one. It's the same resource Contracting Officers use. If you do business in several NAICS codes and you're unclear which one to choose as your primary, it's wise to have a discussion with your PTAC counselor. 

What Other NAICS Codes Should I List in SAM?

Contrary to a very common misconception, an offeror need not list a particular NAICS code in its SAM profile to be awarded a contract designated with that NAICS code. That said, it is a best practice – though not a legal requirement – for a contractor to list every NAICS code that corresponds to work the contractor may bid. 

Don’t go overboard, though, and list irrelevant NAICS codes – like listing NAICS code 311230 (Breakfast Cereal Manufacturing) if you work exclusively in IT. Listing too many NAICS codes can give Contracting Officers the impression that your business isn’t focused on any specific type of work.

What About Subcontracts?

Under the SBA's regulations, an other-than-small prime contractor usually must "assign to each subcontract . . . the NAICS code and corresponding size standard that best describes the principal purpose of the subcontract." In other words, the prime contractor must step into the Contracting Officer's shoes and pick the appropriate NAICS code for each subcontract – and those NAICS codes may or may not be the same as the NAICS code assigned to the prime contract.

If you're in the process of negotiating a subcontract and confused or concerned about what NAICS code to apply, or if you have any other questions about how NAICS codes are used in federal contracting, give your PTAC counselor a call.