Selecting effective NAICS codes for SAM registration requires strategic consideration of your primary revenue-generating activities. Choose one primary code that accurately reflects your main business function, then add 2-4 secondary codes to showcase additional capabilities. Limit your selection to sectors where you have proven experience and can meet eligibility requirements. Review codes quarterly to ascertain alignment with your evolving business operations. Proper NAICS selection directly impacts your visibility to contracting officers and qualification for opportunities.
Understanding the Impact of NAICS Codes on Contract Eligibility
NAICS codes function as critical gatekeepers in the government contracting process, determining which businesses can pursue specific opportunities. These industry classification identifiers directly influence eligibility criteria for federal, state, and local contracts, making their selection a foundational step in procurement strategy.
NAICS codes serve as essential qualification filters, directly impacting which contracts your business can access in the government marketplace.
When government agencies issue solicitations, they assign specific NAICS codes to guarantee qualified vendors respond. A business must register with appropriate codes that accurately reflect its operations to demonstrate compliance regulations. Without matching NAICS codes, contractors cannot access relevant contract opportunities, regardless of their capabilities.
The hierarchical structure of NAICS provides precision in categorizing business activities, allowing agencies to target vendors with specialized expertise. Regular five-year reviews of NAICS codes by the U.S. Census Bureau ensure the classification system remains current with evolving industries and business practices. Correct classification significantly improves a company’s visibility to government buyers and increases the competitive advantage when bidding on contracts.
Businesses should understand NAICS importance beyond basic registration—these codes shape which solicitations appear in search results and which set-aside programs become available. A strategic combination of primary and secondary NAICS codes can optimize your business’s positioning in government marketplaces. Strategic NAICS selection can markedly expand potential government business opportunities.
Strategic Selection of Primary vs. Secondary NAICS Codes
The distinction between primary and secondary NAICS codes represents a foundational aspect of effective SAM registration strategy.
Primary code importance cannot be overstated, as it directly determines contract eligibility and small business size standards. SAM.gov specifically requires companies to designate their dominant revenue-generating activity as the primary code, which receives preferential algorithmic ranking in federal contract searches. Incorrect codes can increase audit risks when IRS evaluates tax returns against industry standards. Accurate code selection is essential for procurement process efficiency and contract matching. The U.S. Census Bureau follows a similar approach by assigning one code to each establishment based on primary revenue-generating activity.
Secondary code flexibility allows businesses to showcase additional capabilities without diluting specialization. Government contractors should limit their portfolio to 3-5 total codes, including secondary designations that represent complementary services or planned expansions.
These secondary codes function as search filters, enabling inclusion in cross-sector opportunities while maintaining focus.
For ideal implementation, companies should:
- Review the primary code quarterly
- Verify alignment with past performance
- Remove rarely used secondary codes
- Document justification for each selection
Best Practices for NAICS Code Management in SAM
Managing NAICS codes effectively requires strategic planning and regular attention throughout the SAM registration process. Businesses should locate the NAICS code section under the ‘Core Data’ tab in SAM.gov and select codes that precisely match their offerings. Code accuracy directly impacts visibility to contracting officers searching for specific capabilities.
Organizations should limit their selection to 3-5 relevant codes, including one primary code that represents their main business activity. Excessive codes can dilute focus and confuse procurement officers. Regular code updates during annual SAM renewal guarantee the profile remains current with evolving business activities. Proper NAICS selection is crucial as it directly affects your eligibility for small business contracts based on the SBA’s industry-specific size standards.
When selecting codes, utilize the U.S. Census Bureau’s NAICS search tool to find appropriate classifications based on keywords or industry descriptions. The six-digit code structure standardizes business classification across North America, ensuring proper categorization of your company’s economic activities. Understanding the hierarchical structure of NAICS codes helps businesses identify their most accurate industry classification from broad sectors down to specific subcategories.
Remember that both NAICS and PSC codes work together to thoroughly describe business capabilities, making proper selection essential for maximizing federal contracting opportunities.
Frequently Asked Questions
How Many NAICS Codes Can I List in My SAM Registration?
There is no strict limit on the number of NAICS codes a business can list in SAM registration. Companies may select multiple codes that accurately reflect their products and services.
However, choosing too many codes can dilute a business’s specialization and focus. The primary NAICS code is particularly important as it determines size standards and eligibility for certain opportunities.
Businesses should select codes that genuinely represent their capabilities and expertise.
Can I Change My Primary NAICS Code After Registration?
Yes, businesses can change their primary NAICS code after completing the SAM registration process.
This flexibility allows companies to adjust their industry classification as their operations evolve. The update can be performed directly through the SAM.gov portal, and changes typically take a few days to reflect in the system.
Maintaining an accurate primary code is essential for contract eligibility, as it represents the main business activity and affects which government opportunities the company can pursue.
Do NAICS Codes Affect Set-Aside Contract Eligibility?
NAICS codes directly determine set-aside contract eligibility.
The SBA designates specific NAICS codes as underrepresented or substantially underrepresented, which establishes whether they qualify for WOSB or EDWOSB set-asides.
For a business to compete for these contracts, their NAICS code must align with SBA’s approved list.
Set-aside criteria require not only the matching NAICS code but also confirmation that qualified businesses exist and can offer fair pricing within that industry classification.
How Often Should I Update My NAICS Codes?
Businesses should review and update their NAICS codes according to established frequency guidelines. The official NAICS system undergoes revisions every five years, with the most recent update in 2022 and the next scheduled for 2027.
Companies should also assess code relevance whenever:
- Their business activities change considerably
- They enter new markets or offer new services
- Following each official NAICS revision cycle
This guarantees accurate business classification and maintains eligibility for relevant contracting opportunities.
Can Different Business Locations Use Different NAICS Codes?
Yes, different business locations can use different NAICS codes. This location flexibility is permitted by federal agencies like SAM, which allows businesses to register multiple locations with distinct NAICS codes that reflect each site’s primary activities.
To guarantee code appropriateness, businesses should document location-specific operations and revenue sources. The Census Bureau also recognizes multi-location businesses as separate establishments if they operate in different industries, enabling tailored classification that accurately represents each location’s primary business function.