NAICS codes determine which contracts you can bid on and whether you qualify as a 'small business.' Here's how to pick the right ones — and why getting this wrong can cost you millions.
A cybersecurity company lost a $12 million contract because of a six-digit number. Their technology was a perfect fit. Their team was exceptional. Their proposal was strong. But they'd registered under NAICS code 541512 (Computer Systems Design Services), which has a small business size standard of $34 million in annual revenue. The contract was set aside for small businesses under NAICS code 541519 (Other Computer Related Services), with a size standard of $30 million. They were eligible under both — but because their SAM.gov profile only listed 541512, they never saw the opportunity.
NAICS codes are the taxonomy of government contracting. Get them right, and you're visible to the right opportunities. Get them wrong, and you're invisible — or worse, competing in categories where you're at a disadvantage.
The North American Industry Classification System assigns a six-digit code to every type of economic activity. The federal government uses these codes for two critical purposes:
Here's where it gets tricky: the NAICS system was designed to classify all economic activity, not specifically for government contracting. A company that builds autonomous drones might legitimately fall under 336411 (Aircraft Manufacturing), 541715 (R&D in Physical Sciences), 334511 (Search, Detection, and Navigation Instruments), or 541512 (Computer Systems Design). Each code has different size standards, different competitive landscapes, and different contracting officers searching for them.
Choosing NAICS codes is like choosing which aisles to stock your product in at a grocery store. Put it in the wrong aisle, and the right customers walk right past it. Put it in multiple relevant aisles, and you multiply your visibility.
Step 1: Start with what you actually do.
Search the NAICS database at census.gov/naics and identify every code that legitimately describes your company's work. The keyword is "legitimately" — don't stretch. If you're a software company, don't claim manufacturing codes just because they have favorable size standards. The government can (and does) challenge NAICS code assignments.
Step 2: Check the size standards.
Visit the SBA's size standards table and look up each code you've identified. For each one, note:
Being "small" under a NAICS code is enormously valuable. It gives you access to small business set-aside contracts, which represent about 25% of all federal contract spending — over $150 billion annually.
Step 3: Research what the government actually buys under each code.
Go to SAM.gov and search for contract awards under your candidate NAICS codes. Look for:
This step separates strategic NAICS code selection from guesswork. A code with high volume and relevant contract descriptions is where you want to be.
Step 4: Add them all to your SAM.gov profile.
You can (and should) list multiple NAICS codes in your SAM.gov registration. There's no penalty for listing several, and every code you include is another search filter that can surface your company to a contracting officer.
Here's a scenario that catches companies off guard: You're a software company with $20 million in annual revenue. Under NAICS 541512 (Computer Systems Design, $34M threshold), you're small. Under NAICS 511210 (Software Publishing, $47M threshold), you're also small — with even more headroom. But under NAICS 518210 (Data Processing and Hosting, $40M threshold), you're still small.
Now imagine a contract is issued under a NAICS code where your size standard threshold is $25 million and your revenue is $24.5 million. You qualify today, but one good quarter could push you over. This is called "size standard creep," and it catches growing companies by surprise. Plan for it.
Key rules to know:
Your SAM.gov profile has one "primary" NAICS code. This is the code that best describes your company's main line of business. While you should list all relevant codes, the primary code matters because:
Choose your primary code based on where the most contract opportunities exist for your specific capabilities — not based on which code sounds most prestigious.
Your NAICS codes aren't set in stone. Update them when:
Review your NAICS codes at least annually — ideally when you renew your SAM.gov registration. Treat it as a strategic exercise, not an administrative one.
NAICS codes are one of those things that seem administrative until they're strategic. The right codes put your company in front of the right opportunities. The wrong codes — or missing codes — make you invisible. Spend the time to get this right, and revisit it regularly. In government contracting, being findable is half the battle.
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