NAICS (North American Industry Classification System)

Full Definition

The North American Industry Classification System (NAICS) is a six-digit hierarchical coding system developed jointly by the United States, Canada, and Mexico to classify business establishments by industry. In government contracting, the SBA assigns a small business size standard to each NAICS code — measured either by average annual receipts (typically $9M to $47M) or number of employees (100 to 1,500). The contracting officer selects the NAICS code that best describes the principal purpose of each acquisition per FAR 19.303. NAICS codes are updated every five years; the current 2022 revision contains 1,012 codes across 20 sectors. Size standards can be challenged by any interested party within specific timeframes outlined in 13 CFR 121.

Why It Matters

Every federal solicitation is assigned a primary NAICS code, which determines the size standard for that specific procurement. Choosing the right NAICS codes for your SAM.gov registration is one of the most impactful decisions a small business can make — it determines whether you qualify as small for specific opportunities, which set-aside contracts you are eligible to compete for, and how agencies discover you in vendor searches. Register under multiple NAICS codes if your capabilities span industries, but be prepared to demonstrate experience in each. Monitor SBA size standard updates annually, as changes can shift your eligibility. If an agency assigns the wrong NAICS code to a solicitation, you can file a NAICS code appeal with the SBA Office of Hearings and Appeals within 15 calendar days.

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