NAICS codes determine eligibility for federal set-aside contracts by defining small business size standards. The SBA establishes specific revenue or employee thresholds for each NAICS code that businesses must meet to qualify. Contracting officers assign one NAICS code to each solicitation, which determines which firms can compete. Businesses must accurately register their relevant NAICS codes in SAM.gov and monitor opportunities aligned with their codes. Proper NAICS identification opens access to billions in set-aside funding opportunities.
Understanding Size Standards and NAICS Eligibility for Set-Aside Programs
While managing federal contracting opportunities, businesses must understand how NAICS codes and size standards determine eligibility for set-aside programs.
The Small Business Administration (SBA) establishes size standards that align with specific NAICS codes on an industry-by-industry basis, creating clear eligibility criteria for small business set-asides.
Each solicitation must specify one NAICS code and its corresponding size standard. Contracting officers select the code that best describes the procurement’s principal purpose.
The contracting officer’s selection of a single NAICS code determines which businesses qualify as small for that specific procurement opportunity.
To qualify, businesses cannot exceed the specified size standard as of the date they represent themselves as small to the contracting officer. The SBA considers affiliates when determining size status, making it essential for companies to accurately assess their total organizational footprint before pursuing set-aside opportunities. Businesses can verify their size status through the System for Award Management to ensure they meet the requirements for federal contracting opportunities. For multiple award contracts, contracting officers may divide solicitations into discrete categories, each with its own NAICS code and size standard to better match specific requirements.
How to Verify Your NAICS Code Qualifies for Specific Federal Set-Asides
Verifying that your NAICS codes qualify for specific federal set-asides represents a critical step in pursuing government contracts.
Small businesses must first use the Census Bureau’s NAICS lookup tool to identify industry-specific codes that precisely match their core services or products.
For federal procurement eligibility, businesses should cross-reference these codes with the SBA website to determine if they’re designated as underrepresented in federal programs.
The NAICS code verification process requires checking specific program lists, such as the WOSB/EDWOSB NAICS list for women-owned business set-asides or reviewing HUBZone requirements.
Companies should validate size standards using SBA’s Table of Size Standards and confirm their SAM.gov profile reflects current NAICS codes.
Regular monitoring of beta.SAM.gov notifications filtered by NAICS codes enables businesses to receive relevant bid alerts.
The six-digit primary NAICS code designation is essential for determining eligibility for small business set-asides and specialized contracting programs offered by federal agencies.
Understanding the standardized framework established by NAICS codes helps businesses correctly align with their respective industries and improve their competitiveness in the federal procurement process.
To protect contract opportunities, businesses must also ensure they meet cybersecurity requirements mandated for government contractors.
Strategies for Leveraging NAICS Classifications to Win Government Contracts
Leveraging NAICS classifications strategically can dramatically increase a small business’s chances of winning federal contracts. Successful contractors align their capabilities with high-demand codes like 541330 (Engineering Services), particularly in sectors where small businesses secure higher award percentages. Businesses should prioritize targeting the Professional Services sector since it accounts for approximately a30% of all government contract awards in FY 2023. Small businesses received $176.1 billion in federal contract awards in FY24, representing significant opportunities for qualified vendors. Official registration in SAM.gov is mandatory for businesses looking to compete for and win federal contracts of any size.
| Strategy | Implementation Approach |
|---|---|
| Targeted Outreach | Focus on agencies with significant spending in your NAICS codes |
| Competitive Analysis | Identify codes with below-average small business participation |
| SAM.gov Optimization | Accurately list relevant NAICS codes to improve visibility |
| Teaming Arrangements | Form partnerships to qualify for multi-code contracts |
Companies should analyze FY24 data showing $33.32B in small business set-asides to identify growth opportunities. Reviewing historical bid data helps uncover underserved niches, while optimizing SAM.gov profiles guarantees visibility in automated agency searches.
Frequently Asked Questions
Can a Business Challenge a Contracting Officer’s NAICS Code Designation?
Yes, businesses can file NAICS code challenges against contracting officer decisions with the Office of Hearings and Appeals within 10 calendar days of a solicitation’s issuance or amendment affecting the NAICS code designation.
How Often Do NAICS Codes and Corresponding Size Standards Change?
NAICS codes are officially updated every five years, with the most recent revision occurring in 2022. Size standard adjustments may occur independently of NAICS updates through SBA regulatory processes as economic conditions warrant.
What Happens if My Business Outgrows a NAICS Size Standard Mid-Contract?
When a business outgrows a NAICS size standard mid-contract, existing contracts typically remain valid, but the company must notify the contracting officer. Future eligibility for small business set-asides will be affected by this business growth.
Can Subcontractors Use Prime Contractor’s NAICS Codes for Set-Aside Eligibility?
No, subcontractors cannot use a prime contractor’s NAICS code for set-aside eligibility. Subcontractor eligibility is independent of the prime’s NAICS code, though the prime contractor’s responsibility includes monitoring subcontracting limitations based on their assigned code.
Do International Companies Use NAICS Codes for U.S. Federal Contracting?
International companies operating in the U.S. federal market must use NAICS codes for federal compliance, registration in SAM, and determining contract eligibility, despite facing greater challenges accessing set-aside opportunities than domestic firms.