Selecting the right NAICS codes for a SAM profile requires identifying primary revenue-generating activities and verifying size standards through the SBA. Companies should first determine their main business function for the primary code, then add relevant secondary codes to showcase additional capabilities. The selection process involves using SAM.gov’s keyword search tool, consulting the NAICS Association database, and regularly reviewing classifications as business activities evolve. Understanding the complete NAICS selection process guarantees maximum visibility for federal contracting opportunities.
Understanding NAICS Code Selection for SAM Profiles
Selecting the correct NAICS code for a SAM profile stands as an essential first step in securing federal contracting opportunities. The North American Industry Classification System uses a six-digit hierarchical structure to categorize businesses by their primary economic activities, with the first five digits enabling comparability across North America and the sixth digit providing country-specific detail.
Contractors must begin by identifying their primary revenue-generating activity, as this forms the basis for their main NAICS code selection. For example, a company primarily focused on nursing care facilities should select code 623110 rather than a broader healthcare category. The SAM system allows businesses to list multiple secondary codes, typically between five and ten, to showcase additional capabilities and increase visibility for diverse contract opportunities. Small business certifications through SAM registration enable participation in specialized federal contracting programs. Maintaining accurate NIK codes is crucial as contracting officers verify these codes before awarding any contracts. Federal compliance standards require businesses to complete SAM registration before participating in any government bidding process.
Selecting your primary NAICS code requires focusing on your main revenue source, while secondary codes expand your contract opportunities.
The selection process requires careful attention to size standards established by the Small Business Administration. Each NAICS code carries specific thresholds for employee counts or annual receipts that determine small business eligibility. A manufacturing company, for instance, must typically maintain 500 or fewer employees to qualify as a small business under most manufacturing NAICS codes.
Contractors can utilize several tools to identify appropriate codes for their business activities. SAM.gov’s built-in keyword search function helps match services to codes, while the SBA Size Standards Tool combines code selection with eligibility verification. The NAICS Association provides detailed industry descriptions and examples to guarantee accurate classification.
Regular review and updates of NAICS codes prove essential as businesses evolve. The system undergoes revision every five years to reflect economic changes, making it vital for contractors to verify their classifications during these updates. Companies should also reassess their codes when introducing new services or shifting business focus to maintain accuracy and compliance.
Common mistakes in NAICS code selection include relying on outdated classifications, choosing overly broad categories, and misaligning codes with current revenue sources. Contractors must confirm their primary code reflects their predominant business activity, as misclassification can lead to disqualification from contract opportunities and compliance issues, particularly in specialized areas like cybersecurity certification requirements.
The proper selection of NAICS codes directly impacts a contractor’s visibility in government searches and eligibility for specific contracts. Organizations should approach code selection methodically, using available resources to verify classifications and regularly reviewing their choices to maintain alignment with current business activities and federal contracting requirements.
Frequently Asked Questions
Can a Business Have Multiple NAICS Codes in Their SAM Profile?
Yes, businesses can have multiple NAICS codes in their SAM profile.
While one primary NAICS code is mandatory and defines the core business activity, companies can add several additional codes to represent their diverse services and products.
Most organizations typically include 3-5 relevant codes, though some may use up to 10.
However, it is crucial to select only codes that accurately reflect the company’s actual capabilities and offerings.
How Often Should I Update My NAICS Codes in SAM?
Businesses should update their NAICS codes in SAM whenever significant changes occur in their operations, with a minimum review frequency of once per year during SAM renewal.
Immediate updates are necessary when exceeding small business size standards or experiencing ownership changes.
Additionally, companies should revise their codes when expanding services, responding to regulatory updates (every 5 years), or pursuing new contract opportunities that require specific NAICS classifications.
What Happens if I Select the Wrong NAICS Code?
Selecting incorrect NAICS codes can result in serious consequences for federal contractors.
Companies may miss relevant contracting opportunities, become ineligible for set-aside contracts, or face legal penalties under the False Claims Act.
Incorrect codes can trigger compliance audits, lead to payment delays, and potentially result in suspension from federal contracting.
Additionally, businesses may face financial losses from unclaimed contracts and increased scrutiny during audits targeting SAM data inconsistencies.
Are State-Specific NAICS Codes Different From Federal Ones?
While federal NAICS codes form the standard classification system, state-level applications can vary in specific ways.
States may include industries that are federally excluded, such as private schools under codes 6111-6113. Some states supplement federal codes with local identifiers for regional economic reporting, though no official state-specific NAICS system exists.
States might also have different reporting requirements and acceptance criteria for business registrations or grant applications.
Do International Companies Need NAICS Codes for SAM Registration?
Yes, international companies must provide NAICS codes during SAM.gov registration to bid on U.S. government contracts.
Unlike U.S. entities that receive automatic NAICS assignments, foreign companies must manually select up to 10 codes that align with their business activities.
The primary NAICS code should reflect their main revenue-generating activity.
These codes are essential for determining business size standards and contract eligibility in the federal procurement system.
