What Are NAICS Codes?
The North American Industry Classification System (NAICS) is the standard framework used by the federal government to classify business establishments by their primary economic activity. Every federal contract solicitation is assigned a NAICS code that describes the principal nature of the work being performed.
NAICS codes are six-digit numbers organized in a hierarchical structure. The first two digits represent the broad economic sector (e.g., 54 for "Professional, Scientific, and Technical Services"). Each subsequent digit narrows the classification: 541 for professional services, 5415 for computer systems design, and 541511 for custom computer programming services.
The system is maintained jointly by the United States, Canada, and Mexico, and is updated every five years. The most recent revision (2022) added new codes and restructured several industry categories to reflect changes in the economy. Staying current with NAICS updates ensures you’re using the right codes in your SAM.gov registration and proposal submissions.
Why NAICS Codes Matter in Government Contracting
NAICS codes serve two critical functions in federal procurement. First, they determine your small business size standard. The SBA assigns a specific size standard to each NAICS code, defined as either maximum average annual revenue or maximum number of employees. Your business is "small" or "other than small" based on the size standard for the NAICS code assigned to a specific contract.
Second, NAICS codes are the primary taxonomy for searching and filtering contract opportunities. When you search for contracts on SAM.gov or any opportunity tracking platform, NAICS codes are one of the most effective filters. Contracting officers use them to categorize their requirements, and contractors use them to find relevant work.
The NAICS code assigned to a solicitation also determines which set-aside programs apply. Some NAICS codes are eligible for WOSB set-asides while others are not, based on SBA studies of industry representation. Understanding which codes apply to your work directly affects your competitive strategy.
How to Identify the Right NAICS Codes
Start by reviewing the NAICS code descriptions on the Census Bureau’s website or through SBA’s NAICS lookup tool. Search by keyword to find codes that match your business activities. Most businesses qualify under multiple NAICS codes, and you should register all applicable codes in your SAM.gov profile.
Look at what NAICS codes are being used on contracts you want to win. Search SAM.gov for opportunities in your field and note which codes are most commonly assigned. This gives you a market-driven perspective on how contracting officers classify the work you perform.
Don’t overlook adjacent codes. A software development company might primarily use 541511 (Custom Computer Programming) but could also qualify under 541512 (Computer Systems Design), 541519 (Other Computer Related Services), or 518210 (Computing Infrastructure Providers). Each code has a different size standard, and some may offer better competitive positioning.
Understanding Size Standards
Every NAICS code has a corresponding SBA size standard that determines the threshold for qualifying as a "small business." Size standards are expressed either as average annual receipts (revenue) over the preceding five years or as the number of employees over the preceding 24 months.
Revenue-based size standards range from $9 million to over $47 million depending on the industry. Employee-based standards (common in manufacturing) range from 250 to 1,500 employees. Some NAICS codes have been adjusted to reflect the realities of specific industries, so never assume the standard — always verify.
Your size status is determined at the time of proposal submission (for negotiated procurements) or at the time of the initial offer that includes price (for sealed bids). This means your size is evaluated against the NAICS code and size standard assigned to that specific solicitation, not your overall business profile.
Affiliation rules can affect your size determination. If your business has ownership ties, management connections, or contractual relationships with other businesses, the SBA may aggregate the revenues or employees of affiliated entities. This is one of the most complex areas of small business regulation and can cause unexpected size determinations.
Commonly Used NAICS Codes in Federal Contracting
Certain NAICS codes appear far more frequently in federal procurements than others, reflecting the government’s primary buying patterns. Understanding the most active codes in your field helps you focus your opportunity search and competitive analysis.
- 541511 — Custom Computer Programming ($34M size standard)
- 541512 — Computer Systems Design Services ($34M)
- 541611 — Administrative & General Management Consulting ($19M)
- 541613 — Marketing Consulting Services ($19M)
- 541715 — R&D in Physical, Engineering, and Life Sciences (1,000 employees)
- 561210 — Facilities Support Services ($47M)
- 561612 — Security Guards and Patrol Services ($29.5M)
- 236220 — Commercial and Institutional Building Construction ($45M)
- 238210 — Electrical Contractors ($19M)
- 511210 — Software Publishers ($47M)
Using NAICS Codes Strategically
Register multiple NAICS codes in your SAM.gov profile to maximize your visibility. When contracting officers and prime contractors search SAM.gov for potential vendors, they often filter by NAICS code. If you only register your primary code, you may be invisible for adjacent opportunities.
Pay attention to which NAICS code is assigned to specific opportunities. Sometimes the same scope of work could be classified under two different codes with very different size standards. If a solicitation uses a code where your company qualifies as small, that’s a better competitive position than one where you might be considered "other than small."
Track changes to size standards. The SBA periodically adjusts size standards based on economic data, and these changes can affect your eligibility. An increase in the size standard for your primary NAICS code is good news — it means you remain small even as you grow. A decrease could push you above the threshold.
NAICS Codes as a Competitive Tool
NAICS codes are more than bureaucratic classifications — they’re a competitive tool that determines which opportunities you can access, whether you qualify as small, and how visible you are to government buyers. Take the time to thoroughly identify all applicable codes, understand the associated size standards, and register them in your SAM.gov profile.
Combine NAICS code knowledge with smart search strategies to find the government contracts that best fit your capabilities. Filter by your primary codes, set up alerts for new opportunities, and regularly review whether additional codes should be added to your profile as your business capabilities evolve.