How to choose NAICS codes for your shop

What a NAICS code does in federal buying

NAICS, the North American Industry Classification System, is a Census Bureau scheme that sorts businesses by what they do. Federal buying borrows it for two jobs. Contracting officers assign one NAICS code to each solicitation. And the Small Business Administration sets a size standard for each code, which decides whether you count as small when you bid under it.

So the code on a notice is not a description of the part. It says which industry the buyer thinks should supply it, and which size test applies. A buyer who wants machined brackets may post under Machine Shops, or under an aircraft parts code, or under a fabricated metal code, depending on the contract and the buyer's habits.

In SAM.gov you list the codes that fit your business, and you mark one as primary. Buyers and primes search the registry by code when they build vendor lists. Set-aside decisions rest on how many small businesses they find.

Primary code first

Your primary NAICS should be the code that best describes the largest share of what you actually do and earn. For a job shop that mills and turns to customer drawings, that is usually 332710, Machine Shops. For a shop built around screw machines and CNC lathes making turned parts in volume, 332721, Precision Turned Product Manufacturing, may fit better. A sheet metal or weldment shop points toward 332322, Sheet Metal Work, or 332313, Plate Work.

Read the official definition on census.gov before you choose. Each code has an index of activities it includes and a note on what it excludes. Pick the code whose definition sounds like your floor.

The primary code matters for two reasons. It is the first thing a buyer sees on your record. And for some programs and reports, your status is judged by it. Do not pick a code because it has a generous size standard if the definition does not fit.

Secondary codes: a real net, not a wide one

Secondary codes tell buyers about the other work you can do. List the codes for products and services you actually deliver and can prove with past work. Leaving off a code you genuinely fit costs you visibility. Adding codes you cannot perform gets you sources sought notices you cannot answer and, worse, awards you cannot deliver.

A useful test for each secondary code: can you name a customer and a part you have made that fits the definition? If not, leave it off for now.

Think in terms of what buyers post, not just what you make. If DLA and the Army post machined spares for ground vehicles under a vehicle parts code, and you make those parts, list that code even if your identity is a machine shop. Award history shows which codes buyers actually use. That is the list to match.

Size standards and the nonmanufacturer rule

Every NAICS code carries an SBA size standard. For most manufacturing codes the standard is a maximum number of employees, averaged over a period the SBA defines. For many service codes it is average annual receipts. The figures change from time to time, so check the current table on sba.gov rather than relying on memory or a forum post.

When you bid under a set-aside, you certify that you are small under the code on that solicitation. Affiliates count. If a parent company or a common owner controls other firms, their employees may be added to yours.

One more rule to know if you ever quote parts you do not make. Under a small business set-aside for supplies, the nonmanufacturer rule generally requires that you supply the product of a small business made in the United States, unless the SBA has waived the rule for that class of product. Read the rule on sba.gov and check whether a waiver applies before you quote as a dealer.

Check your choices against real awards

The best test of your code list is award history. Look up recent awards for the parts you make. Note which NAICS code each buyer used. If the buyers you want to sell to post under a code that is not on your record, add it if the definition fits. If a code on your record never shows up in the awards that look like your work, ask whether it belongs.

USAspending and FPDS both let you filter by NAICS and PSC. So does the SAM.gov contract opportunities search. Save searches for your top few codes and watch them for a month. That tells you more than any list of suggested codes, including the one above. The NAICS pages on this site show award history by code once data is loaded.