What Are NAICS Codes?

NAICS is the standard used by the United States, Canada, and Mexico to classify business establishments by the type of economic activity they perform. The system uses a six-digit hierarchical code structure. The first two digits identify the economic sector, the third identifies the subsector, the fourth the industry group, the fifth the industry, and the sixth the national industry.

For federal contracting purposes, NAICS codes serve two critical functions. First, they are used on every solicitation to define the industry of the work being procured. Second, each NAICS code has an associated SBA size standard — a revenue or employee threshold that determines whether your business qualifies as "small" under that code. Being classified as small opens access to set-aside contracts, sole-source awards, and other programs reserved for small businesses under FAR Part 19.

How NAICS Codes Affect Set-Asides and Size Standards

Every federal solicitation includes a NAICS code that the contracting officer has determined best describes the principal purpose of the procurement. This NAICS code determines the applicable size standard for that particular contract. If your business is under the size standard for that NAICS code, you can compete for that set-aside.

Size standards vary significantly between NAICS codes. For example, NAICS 541511 (Custom Computer Programming Services) has a size standard of $34 million in average annual receipts, while NAICS 541330 (Engineering Services) has a standard of $25.5 million, and NAICS 236220 (Commercial and Institutional Building Construction) uses an employee-based standard of 1,000 employees. The same company could be "small" under one NAICS code and "other than small" under another.

How to Research Which NAICS Codes to Use

Start with the NAICS Manual

The Census Bureau maintains the official NAICS manual at census.gov/naics. Search by keyword to find codes that describe your products or services. Read the full description for each code, including the "Illustrative Examples" and "Cross-References" sections, which clarify what falls under the code and what belongs elsewhere. You can also browse our NAICS Code Directory for codes used in federal contracting.

Look at What Your Competitors Use

Search for your competitors on SAM.gov and review their registered NAICS codes. Look at companies that perform work similar to yours, especially those winning contracts you would want to pursue. This competitive intelligence is free and publicly available. Use our Contractor Directory to find companies in your industry.

Review Active Solicitations

Search SAM.gov Contract Opportunities for solicitations in your field and note which NAICS codes contracting officers assign to them. This shows you the codes that agencies actually use when buying what you sell — which may differ from the codes you would intuitively select. Pay attention to patterns: if most IT services solicitations in your niche use 541512 rather than 541511, register 541512.

Review Past Awards

Use USASpending.gov to search for past contract awards in your industry. Filter by NAICS code to see how much the government spends under each code. This helps you identify high-volume codes where opportunities are plentiful versus low-volume codes where opportunities are scarce.

Using the SBA Size Standard Table

The SBA publishes a table of size standards for every NAICS code, available at sba.gov/size-standards. Size standards are expressed either as average annual receipts (revenue) over the preceding three or five completed fiscal years, or as number of employees averaged over 12 months.

Revenue-Based Size Standards

Most service and professional industry NAICS codes use revenue-based standards. Calculate your average annual receipts by taking the total revenue for the applicable period (three or five years, as specified in 13 CFR 121.104) and dividing by the number of years. Include all revenue from all sources, including affiliates under SBA affiliation rules (13 CFR 121.103).

Employee-Based Size Standards

Manufacturing, mining, and some other industries use employee-based standards. Calculate your average number of employees by averaging the number of employees for each of the 12 pay periods preceding the self-certification date. Include all employees — full-time, part-time, and temporary — as well as employees of affiliates.

Registering Multiple NAICS Codes

SAM.gov allows you to register as many NAICS codes as legitimately describe your business capabilities. You should register every code under which you can credibly perform work. However, there are practical considerations.

• Credibility matters. If you register 50 NAICS codes spanning unrelated industries, contracting officers may question whether you can actually perform in all those areas. Stick to codes where you have genuine capability.
• One primary code. You must designate a single primary NAICS code that best describes your principal business activity. This primary code is used for general small business classification purposes when a specific solicitation NAICS code is not applicable.
• Size varies by code. You may be small under some of your registered codes and large under others. This is normal and expected. You self-certify as small on a per-solicitation basis based on the NAICS code assigned to that solicitation.

When to Change Your NAICS Codes

Review your NAICS codes during every annual SAM.gov renewal. Consider changing or adding codes when:

• Your business has expanded into new service areas
• You discover that solicitations in your market consistently use a different code than the one you registered
• NAICS codes are revised (the Census Bureau updates the NAICS manual every five years, with the most recent revision in 2022)
• SBA size standards change (SBA periodically adjusts size standards, which can change your small business eligibility under specific codes)
• You are approaching the size standard threshold and a different, equally applicable code has a higher threshold

NAICS Code Challenges

If a contracting officer assigns a NAICS code to a solicitation that you believe is incorrect, you can challenge it. Under FAR 19.303 and SBA regulations (13 CFR 121.1101-1103), any interested party can file a NAICS code appeal with the SBA Office of Hearings and Appeals (OHA) within 10 calendar days of the solicitation's issuance. OHA will issue a decision, and the contracting officer must comply with OHA's determination.

A NAICS code challenge is appropriate when the assigned code does not accurately describe the principal purpose of the procurement. This matters because the wrong code could make the size standard too high (allowing larger firms to compete as "small") or too low (excluding genuinely small firms in the correct industry).

Common NAICS Code Mistakes

• Choosing codes based on aspiration rather than capability. Register codes where you have existing, demonstrable capability — not codes for work you hope to do someday.
• Registering too few codes. If your business legitimately spans multiple NAICS codes, register all of them. Missing a code means you may not appear in searches for that category.
• Ignoring the size standard implications. Two similar codes can have very different size standards. Understand the financial implications of each code you register.
• Not updating codes after NAICS revisions. When the Census Bureau revises the NAICS manual, some codes are split, merged, or renumbered. Update your registration accordingly.
• Using outdated competitor research. A competitor's NAICS codes may be years old and no longer reflect current agency buying patterns.

• How many NAICS codes can I register on SAM.gov?

  There is no hard limit on the number of NAICS codes you can register on SAM.gov. You should register every code that legitimately describes your business capabilities. However, registering an unreasonably large number of unrelated codes can undermine your credibility with contracting officers.

• Can I change my primary NAICS code?

  Yes. You can change your primary NAICS code at any time by updating your SAM.gov registration. Your primary code should reflect your principal business activity — the work that generates the majority of your revenue. Changing your primary code can affect your general small business classification.

• What happens if I register the wrong NAICS code?

  Registering the wrong code can mean you miss solicitations in your industry (if agencies search by NAICS code and you are not registered) or face the wrong size standard. Review and correct your codes during your annual SAM.gov renewal. There is no penalty for updating your NAICS codes.

• Can I bid on a contract if the solicitation NAICS code is not on my SAM registration?

  Yes. The NAICS codes on your SAM.gov registration do not restrict which contracts you can bid on. However, you must self-certify as small under the solicitation's NAICS code if you are competing for a small business set-aside. Having the relevant code on your SAM profile also makes it easier for agencies and prime contractors to find you.

• How often do NAICS codes change?

  The Census Bureau revises the NAICS manual every five years. The most recent revision was in 2022. Changes can include new codes, retired codes, split codes, and reclassifications. SBA size standards are reviewed and updated on a separate cycle, typically every five years as well.

• What is the difference between NAICS codes and PSC codes?

  NAICS codes classify businesses by the type of economic activity they perform. Product Service Codes (PSCs) classify what the government is buying. A single business may have multiple NAICS codes, and a single NAICS code may map to multiple PSC codes. Both are used in federal procurement but serve different purposes.