Understanding NAICS Codes for Federal Contracting
The North American Industry Classification System (NAICS) is the standard used by federal agencies to classify business establishments. Every contracting opportunity posted on SAM.gov is tagged with a NAICS code that identifies the industry of the work being solicited. If you are pursuing federal contracts, selecting the right NAICS codes is one of the most important steps in your SAM.gov registration.
How NAICS Codes Are Structured
NAICS codes range from 2 to 6 digits, forming a hierarchy from broad economic sectors down to specific national industries:
- 2 digits — Economic sector (e.g., 54 = Professional, Scientific, and Technical Services)
- 3 digits — Subsector (e.g., 541 = Professional, Scientific, and Technical Services)
- 4 digits — Industry group (e.g., 5415 = Computer Systems Design and Related Services)
- 5 digits — NAICS industry (e.g., 54151 = Computer Systems Design and Related Services)
- 6 digits — National industry (e.g., 541512 = Computer Systems Design Services)
Federal solicitations use the 6-digit level. The NAICS code assigned to a contract also determines which SBA small business size standard applies, measured by either annual revenue or number of employees.
Choosing the Right NAICS Codes
Most businesses register multiple NAICS codes that reflect their full range of capabilities. A cybersecurity firm, for example, might register under 541512 (Computer Systems Design), 541519 (Other Computer Related Services), and 541990 (All Other Professional Services). When bidding on a contract, the contracting officer determines which single NAICS code applies — your job is to make sure your SAM.gov profile covers all the codes relevant to your work.
NAICS Codes and Small Business Set-Asides
Each NAICS code has an associated SBA size standard that defines whether your company qualifies as a small business for contracts under that code. Size standards vary by industry — some are measured by average annual receipts (e.g., $16.5 million) and others by number of employees (e.g., 1,000 employees). If a contract is set aside for small businesses under a specific NAICS code, you must meet the size standard for that code to be eligible to bid.