In the world of government contracting, it can sometimes feel like people are speaking a different language, one that’s made up of innumerable incomprehensible acronyms. Two of these that you may have encountered are PSC, which stands for Product and Service Code, and NAICS, which stands for North American Industry Classification System. Despite their differences, these are frequently confused by even seasoned contractors. In this blog, we’ll dive into what these terms mean, the differences between them, and how they can be useful to you.
So, what are PSCs and NAICS codes? A PSC is a 4-character, alphanumeric code assigned to products and services purchased by the government. Codes that begin with a number indicate products, while codes that begin with a letter indicate services. A NAICS Code is a six-digit numeric code that describes the core of a company’s business. These digits indicate the economic sector, subsector, industry group, NAICS industry, and national industry that best describe your business.
Let’s dig a little deeper into the differences between PSCs and NAICS Codes. Many contractors confuse PSCs and NAICS Codes, but the truth is, they are completely different codes with different functions.
The biggest difference is in what they describe. PSCs refer to products and services—in other words, the things that your business is selling. NAICS Codes, on the other hand, describe the business itself—the entity doing the selling. Because they describe different things, they also serve completely different functions.
The main purpose of PSCs is simply to help the government track and categorize spending. Because all government contracts require PSCs, they are an efficient way for government agencies to see where their money is going. One of the main purposes of NAICS Codes is to help businesses determine whether or not they qualify as a small business. The Small Business Administration (SBA) uses NAICS Codes to determine size standards for businesses, which are determined either by number of employees or by annual “receipts” (SBA’s specific method of measuring average annual revenue).
This is why NAICS Codes are so important—a business may qualify as small under one NAICS, but not another. There’s one more difference which is subtle, but critical: whether to use the word “code” after the acronym. Saying “NAICS Code” is correct, but saying “PSC code” is redundant, because the “C” stands for code. This is a small detail, but one that will help keep your correspondence professional.
Both PSCs and NAICS Codes are self-assigned, so you may be wondering how to determine the correct code. When determining what PSC to use for a specific product or service, you can use the PSC Selection Tool. This resource allows you to search for PSCs using keywords or Large Categories.
It displays the details of each PSC, such as what products or services are included and excluded under that PSC. Another extremely helpful feature of this tool is that it displays a suggestion for which NAICS Code that PSC could fall under. These are not hard rules, but it can be a helpful way to check confirm that you’re on the right track for choosing a PSC if you already know your NAICS Code.
Determining NAICS Codes is also simple. If you are already on the GSA Schedule, then you already have a primary NAICS Code. If you’re not sure what your code is, simply log on to SAM.gov and check your information there. If you don’t have a NAICS Code yet, you can use the search tools on the NAICS website. This website has both a keyword search and a drill-down table to allow you to find the best match for your business.
Now you understand the difference between PSCs and NAICS Codes—but you may be wondering how they can be useful to you. We’ve already covered the main purposes of PSCs (tracking government spending) and NAICS Codes (determining small business eligibility), but they have many more uses than these.
One way in which both PSCs and NAICS Codes can be extremely helpful to you as a contractor is finding opportunities. When searching for contracting opportunities, you can use both NAICS Codes and PSCs to help find only relevant opportunities. On websites like SAM.gov and the Federal Procurement Data System (FPDS), you can filter search results using PSCs, NAICS Codes, or both. These codes are much more specific than simply using keywords and will give you much more accurate results. In addition to finding opportunities, you can also use these websites to look at trends in government spending and to help identify competitors.
Knowing your way around PSCs and NAICs Codes is a must for anyone in the government contracting world. These codes are especially relevant when it comes to GSA—you have to have a NAICS Code in order to submit an offer. If you want more information about NAICS Codes, check out some of our other blogs such as NAICS Codes 101 in 2024 or Identify Your Best Opportunities with NAICS Codes. If you’re still confused by PSCs and NAICS Codes, don’t hesitate to reach out to Winvale.