Primary NAICS codes represent a business’s main revenue-generating activity, while secondary codes cover additional operations. For SAM registration, strategically selecting both maximizes visibility to government contracting officers. Companies should analyze solicitation requirements, verify size standards, and document decision rationales to defend against protests. Annual code portfolio reviews guarantee compliance with operational changes and prevent misclassification issues. Proper NAICS selection directly impacts contract opportunity eligibility and competitive positioning in federal procurement.
Critical Differences Between Primary and Secondary NAICS Codes
Understanding the distinction between primary and secondary NAICS codes represents a crucial element for businesses during SAM registration. The primary code importance cannot be overstated, as it identifies the main business activity that generates the highest revenue for an organization. Federal agencies use this designation to classify establishments for statistical purposes, with each entity receiving only one primary code. These codes are self-assigned by businesses based on their core operations and revenue sources. Proper selection of NAICS codes significantly impacts a company’s eligibility for contracts in the government procurement process.
In contrast, secondary code roles involve representing additional business activities that contribute significant but lesser portions of a company’s revenue. Large organizations often maintain multiple secondary codes to reflect diverse operations, such as manufacturing and retail services under one corporate umbrella. These codes help provide a broader picture of the company’s operations.
When preparing for SAM registration, businesses must carefully select their primary NAICS code to guarantee proper classification and maximize visibility for relevant government contract opportunities, while secondary codes provide a more complete picture of the company’s capabilities.
Step-by-Step Code Selection Process for Government Contract Success
The pathway to effective NAICS code selection begins with a methodical approach that guarantees compliance with federal regulations while maximizing competitive advantages. Contractors must first analyze the principal purpose of the anticipated procurement, examining technical requirements against the NAICS manual descriptions.
When establishing code alignment, businesses should:
- Review the solicitation’s scope of work to identify the predominant function
- Reference the SBA’s Table of Small Business Size Standards for appropriate thresholds
- Verify whether employee-based or receipts-based standards apply
- Document decision rationale to defend against potential OHA protests
For multi-domain contracts like OASIS+, procurement strategy requires understanding domain-specific primary code assignments. Businesses should regularly update their NAICS codes to ensure ongoing compliance with industry-specific regulations and accurately reflect any changes in their operations. Selecting codes that accurately represent your core business activities is essential for federal marketplace visibility and competitiveness.
Ordering Contracting Officers must dynamically determine NAICS codes for each solicitation based on functional requirements rather than contractor business operations. When conducting market research, contractors can use NAICS codes to identify spending patterns and competition within specific government sectors. This guarantees accurate FPDS reporting while maintaining eligibility across awarded codes regardless of primary designation.
Maximizing SAM Registration Impact Through Strategic NAICS Planning
Crafting a strategic NAICS code portfolio transforms standard SAM registration into a powerful business development tool for government contractors. Successful vendors analyze federal spending patterns to identify high-opportunity codes that align with their capabilities while guaranteeing NAICS relevance to actual operations.
Organizations should implement a systematic approach:
- Review spending data through FPDS to identify agencies purchasing similar services.
- Benchmark competitor code selections in target market segments.
- Confirm code alignment with current business activities and documented capabilities.
- Prioritize codes matching emerging federal spending trends.
- Cross-reference NAICS with Product Service Codes for complete profile optimization.
Understanding specific industry sectors is crucial for selecting NAICS codes that accurately represent your business activities to government entities.
Annual code portfolio reviews during SAM renewal confirm continued compliance with changing operations. This proactive approach prevents potential auditing issues while positioning the company for maximum visibility in contract matching algorithms. Selecting both primary and secondary NAICS codes accurately ensures businesses are properly classified by industry for government contracting opportunities.
Maintaining documentation that justifies each selected code provides protection during any federal review process. Small businesses should verify that their chosen NAICS codes comply with size standards in 13 CFR 121 to maintain eligibility for small business set-aside contracts.
Frequently Asked Questions
Can a Business Change Its Primary NAICS Code After Initial SAM Registration?
Yes, a business can change its primary NAICS code after initial SAM registration.
During regular SAM registration updates, companies may modify their primary code to reflect evolving business activities or strategic shifts. This process is completed through the Core Data tab in the entity registration section.
NAICS code changes are typically processed within one business day. Organizations should guarantee any adjustments accurately represent their current operations to maintain compliance and optimize eligibility for federal contracting opportunities.
How Do NAICS Codes Affect Joint Venture Eligibility Requirements?
NAICS codes directly determine joint venture eligibility requirements through size standards.
During eligibility assessments, each partner in a joint venture must meet the size standard for the procurement’s assigned NAICS code.
The primary NAICS code influences which small business programs the joint venture can participate in, such as 8(a) or HUBZone.
Joint venture criteria typically require that all partners maintain compliance with size limitations established by relevant NAICS codes throughout the contract period.
Do International Companies Use Different Classification Systems for Federal Contracts?
International companies often use domestic classification systems like JSIC (Japan) or ANZSIC (Australia) in their home countries.
However, for U.S. federal contract compliance, these firms must use NAICS codes regardless of their native systems.
While the UN’s ISIC and EU’s NACE are harmonized with NAICS for cross-border comparability, they cannot substitute for NAICS in federal procurement.
Foreign contractors must map their activities to appropriate NAICS codes when registering in SAM.
How Often Should Secondary NAICS Codes Be Reviewed and Updated?
Organizations should conduct secondary code reviews annually to align with SAM.gov maintenance cycles.
However, more frequent updates are necessary when:
- Adding or removing service offerings
- Pursuing new contract opportunities
- Responding to regulatory changes
Code update frequency should increase to semi-annual for businesses in evolving markets.
Companies must verify secondary codes 1-2 days before bid submissions to guarantee proper registration status, especially when pursuing opportunities that require specific NAICS classifications.
Can the Same NAICS Code Serve Different Size Standards Across Industries?
No, a specific NAICS code cannot serve different size standards across industries. Each NAICS code has exactly one designated size standard assigned by the SBA.
The industry variations in size standards occur between different NAICS codes, not within the same code. For example, NAICS 324110 (Petroleum Refineries) maintains its $1.5B standard consistently, while NAICS 324122 (Asphalt Shingle Manufacturing) consistently uses its $1.1B standard regardless of the business using it.