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NAICS codes 101 in 2019 Blog Feature
Matthew Lewis

By: Matthew Lewis on November 20th, 2019

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NAICS codes 101 in 2019

GSA Schedule | Resources and Insight | Contracts | 5 Min Read

If you have a GSA contract or have worked with the General Services Administration in any capacity, you have undoubtedly heard the terms “NAICS code” referenced before. But what exactly is a NAICS Code? And what is their relevance to the GSA and Multiple Award Schedule?

NAICS is an acronym for North American Industry Classification System that was established in 1997 to create more connectivity with statistical agencies of Mexico and Canada. The purpose in creating this specific classification system was simple: to create a universal North American standard and provide a platform by which Federal Statistics Agencies could better analyze and publicize the collection of statistical data related to the US economy. A NAICS code is a six-digit numeric code.

What Are NAICS Codes?

Developed by the Office of Management and Budget (OMB), NAICS is a classification system used by government agencies to collect, analyze and publish statistical data on the United States business economy. The federal procurement sector uses the code to classify industries.

To put it in the simplest terms possible, a NAICS code is a reference number or point that is used to describe the core of a firm’s business. GSA determines which SIN numbers match with which NAICS codes by looking at the scopes of each and matching them as closely as possible. According to section 19.303 of FAR, contracting officers are specifically looking at “industry descriptions in the U.S. NAICS Manual, the product or service description in the solicitation and any attachments to it, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being purchased.” If you are a MAS schedule holder and don’t know your current NAICS code or are wondering how you can view your current NAICS code, all NAICS codes are listed within the System for Award (SAM) webpage.

NAICS digits

A NAICS code is a six-digit numeric code. Any code above 6 digits is not a NAICS code, though it may be based on NAICS codes. The first two code digits define the economic sector. The third, fourth, fifth and six digits designate the Subsector, Industry group, NAICS industry and National industry respectively.

Why Are They Important?

NAICS codes are important because they put your business into categories used by agencies to meet their procurement needs. You can find opportunities based on NAICS code. If you search for opportunities under NAICS code 111219 (Other Vegetable (except Potato) and Melon Farming), but you grow potatoes, that becomes a problem for obvious reasons. You should be searching for NAICS code 111211 (Potato Farming). While the example may be silly, it shows how important it is to pay attention to detail with NAICS codes. There could be a code that more closely fits your specialty that you might miss.

Self-Assigning System

One nice feature of the NAICS code system is that it is a self-assigned system. This means a company can select a NAICS that best applies to the core of their business from their own perspective. This also applies to those who may be seeking schedules with GSA. Although NAICS are already pre-determined, companies can request a NAICS code change as long as it is relevant to the scope of their business and falls within the same category. The only instance in which a NAICS code cannot be self-assigned is when it is dealt through OSHA (Occupational Safety and Health Administration), the EPA (Environmental Protection Agency), or the DEP (Department of Environmental Protection) which has to do with environmental factors more than anything else.

Size Standards Matter

Understanding the business size standards for NAICS codes is critical. The Small Business Administration (SBA) developed size standards for each NAICS category. These are used to determine whether a firm qualifies as a large business or small business. Size standards are determined in one of two ways: either by the number of employees a company has or by measuring the average annual “receipts” a company produces. Annual receipts as defined in FAR 19.101, refers to the gross revenue a company generates from a number of factors including revenues from sales, interests, rents, fees, and commissions among other things. Qualifying as a small business has several advantages, including increased marketing and federal business sales opportunities.

New Look Consolidation

On October 1st of this year, GSA released a new refurbished Multiple Award Schedule Consolidation, moving from “schedules” to “categories,” decreasing approximately two-thirds of the total number of SINS, and modifying the format by which MAS schedules are viewed and operated. One notable change that came with the MAS Consolidation was the numeric description of SINS. Under the previous GSA Schedule, most SIN numbers did not resemble NAICS Codes. Note the example below that illustrates the difference in numerical values between SINS and their corresponding NAICS codes: 

SIN Title SIN Number NAICS Code
Filter Elements 540 21 339113
Panel Meters 602 24 334515
Environmental Consulting Services 889 1 541620


Under the new Multiple Award Schedule, SIN numbers and NAICS codes share a common collection of numbers with some SINS having a few additional characters. The purpose of this change and additional updates to the new consolidated Schedule was to help provide consistency throughout the program and help streamline and simplify the entire process. You can see the increased similarities between SIN number and NAICS codes in the consolidated MAS schedule in the chart below:

SIN Title SIN Number NAICS Code
Document Conversion Services 518210DC 518210
Copier Rental Solutions 532420C 532420
Gloves 339113G 339113

 

Final thoughts

NAICS codes serve as an important measuring point for multiple Federal statistical agencies in addition to the GSA. Having a better knowledge and understanding of NAICS Codes and their applicability will also help assist contractors in searching for better business opportunities. For more on the importance of NAICS Codes and additional information on the federal marketplace in general, subscribe to our blog!

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About Matthew Lewis

Matthew Lewis is a consultant in Winvale’s Government Contract Services Department. He is originally from Roanoke, Va and graduated from Roanoke College with a degree in History.