NAICS (North American Industry Classification System)

The North American Industry Classification System (NAICS) is the standard used by the United States, Canada, and Mexico to classify business establishments by their primary economic activity, and it is the foundational code that determines which federal contract opportunities a supplier can pursue on platforms like SAM.gov.

What is NAICS?

NAICS assigns every business a six-digit code that places it within a hierarchy of sectors, subsectors, industry groups, and individual industries. For example, a firm that writes custom software would typically carry code 541511 (Custom Computer Programming Services). In US federal procurement, contracting officers attach one or more NAICS codes to each solicitation, and those codes also determine the applicable size standard, the revenue or employee threshold below which a business qualifies as a small business for that particular contract. This matters because many federal opportunities are set aside exclusively for small businesses, and eligibility hinges on your NAICS code and whether your firm falls under the matching size standard.

The psc-product-and-service-codes-us-federal system describes what the government is buying; NAICS describes the industry of the seller. Both appear on a federal solicitation, and suppliers need to understand both to manage their registrations and set-aside eligibility correctly. Beyond the US, Canada uses NAICS for its own procurement classification, so the system is relevant for suppliers targeting opportunities across North America.

Why NAICS matters for bidders

Your NAICS codes in your SAM.gov registration are not just administrative entries: they define the universe of set-aside opportunities you are eligible for and the size standards the agency will use to verify your small-business status. Registering codes that match the work you actually perform, rather than aspirational categories, keeps you compliant with certifications. It also makes your capability statement credible, since contracting officers cross-check registered codes against the solicitation NAICS when shortlisting sources. Review your NAICS portfolio annually: if your company has grown into new service lines, adding the right codes opens new set-aside markets; if you have shed capabilities, removing stale codes keeps your profile clean and defensible.

FAQ

How many digits is a NAICS code?

NAICS codes are six digits, representing five levels: sector (two digits), subsector (three), industry group (four), NAICS industry (five), and national industry (six).

What is a NAICS size standard?

The US Small Business Administration sets a revenue or employee ceiling for each NAICS code; if your firm falls below that ceiling, you qualify as a small business for contracts assigned that code and may be eligible for set-aside awards.

Does NAICS apply outside the United States?

NAICS is the shared system for the US, Canada, and Mexico. Outside North America, other classification systems such as unspsc or isic-international-standard-industrial-classification are more commonly used.