It’s an important question. NAICS codes have a lot to say and savvy businesses learn to listen. If you know them well, you can use them to your advantage.
North American Industry Classification System codes—“NAICS” codes—are an industrial categorization system published by the United States Census Bureau. They describe various industrial sectors across North American and assign six-digit codes to each for record keeping purposes.
The SBA utilizes NAICS codes as the backbone of its small business size program. Each NAICS code is assigned a revenue or employee size standard by the SBA. For set-aside procurements, the awardee cannot exceed the threshold of the NAICS code assigned to the solicitation.
NAICS codes are critical to small business set-aside procurements, but this isn’t exactly news. What is more interesting is the role NAICS codes play with respect to limitation on subcontracting compliance.
The limitation on subcontracting applies to all contracts set-aside for small business participation, including set-asides for any of the SBA’s socioeconomic programs. It restricts how much money may be paid by the prime contractor to entities that do not share small business or socioeconomic status of the prime contract.