NAICS Code List

The North American Industry Classification System (NAICS) is used to categorize like businesses.
The North American Industry Classification System (NAICS) is used to categorize like businesses. | Source

NAICS Code List

The NAICS code list is utilized by businesses but primarily the US federal government to categorize businesses into an industry segment. This segment is then given a code, and all who fall in that segment or code can use the code number to identify what they do merely by stating the numerical classification.

History of NAICS Code List

The NAICS code list is an extension or perhaps a revision of the SIC code list. The Standard Industrial Classification (SIC) was formed during The Great Depression to segment businesses into industry classifications. It worked for decades when change was slow and the slow moving federal government infrequently updated the list. The SIC list was last updated in 1987.

This infrequent updating did not give much allowance for new industries or classifications. Many codes were stuck in the 1930’s and with the rise of Information Technology (IT) whole new industries called out to be classified. In the 1990’s the federal government from many different departments developed the North American Industrial Classification System (NAICS) code list, pronounced nakes. North America was used to also encompass Mexico and Canada (NAFTA was big at this time).

NAICS Code List Structure

The NAICS code list is a six digit classification which provides more sub-categorization that the four digit SIC code list. The first two digits identify the industry sector (there are twenty sectors, SIC had only ten). An example for an Electrical Contractor whose code is 238210, the first two digits stand for Construction (23). The third digit (8) is industry sub-sector (Specialty Trade Contractors), fourth digit (2) is industry group (Building Equipment Contractors), and fifth (1) is industry (Electrical Contractors and Other Wiring Installation Contractors).

The sixth digit is used when an industry or need is country specific. So, among countries the first five digits of a code will be constant but the sixth digit can change.

For the example of an electrical contractor, NAICS 238210, it breaks down like this

23 - Construction (Industry Sector)

238 - Specialty Trade Contractors (Industry Sub sector)

2382 - Building Equipment Contractors (Industry Group)

23821 - Electrical Contractors and Other Wiring Installation Contractors (Industry)

238210 - Universal (Country)

NAICS Code List Usage

Government agencies utilize the NAICS code list extensively to find vendors. Searching the Central Contractor Registration (CCR), purchasing or contracting will seek vendors by NAICS code and narrow from there. Many contract solicitations will have a requirement that only businesses listed under a certain NAICS code are eligible to apply. The upside is that there is rarely a limit to the number of codes a business can list.

Indeed, many SBA certified minority businesses will wind up having a large list of NAICS code because opportunities may exist for them outside of standard codes. Also, subjectivity plays a part as contracting and purchasing department may not know or realize the best code to use. There are times when a solicitation will come out that suits your business to a “T” but will have an inexplicable NAICS code listed. Therefore, a business would have to add that NAICS code to pursue the contract. Once, the contract was awarded a business will want to stay listed, probably out of convenience, but also for future possible contracts. A way to uncover possible codes used for contract your business could do is to look at codes listed for competitors, or businesses which are already successful in government contracting.

The summation is to add as many NAICS code as are applicable to a business is able to perform, and not expect a single code will cover all possibilities.

The Twenty NAICS Sectors

11 - Agriculture, Forestry, Fishing and Hunting

21 - Mining

22 - Utilities

23 - Construction

31-33 - Manufacturing

42 - Wholesale Trade

44-45 - Retail Trade

48-49 - Transportation and Warehousing

51 - Information

52 - Finance and Insurance

53 - Real Estate and Rental and Leasing

54 - Professional, Scientific, and Technical Services

55 - Management of Companies and Enterprises

56 - Administrative and Support and Waste Management and Remediation Services

61 - Education Services

62 - Health Care and Social Assistance

71 - Arts, Entertainment, and Recreation

72 - Accommodation and Food Services

81 - Other Services (except Public Administration)

92 - Public Administration

Business Resources

North American Industry Classification System, 2012
North American Industry Classification System, 2012

NAICS is updated every five years and this volume is the most recent being published in 2012. Grab this book to see what codes your business can be classified as doing. Many business provide more than service, and that not even in the coding scheme.

 
Contracting with the Federal Government
Contracting with the Federal Government

This is the definitive how-to book on getting government contracts. A must have if a business is serious about government contracts.

 
Selling to the Government: What It Takes to Compete and Win in the World's Largest Market
Selling to the Government: What It Takes to Compete and Win in the World's Largest Market

A very good book about discovering contracting opportunities from the federal government.

 
Getting Started in Federal Contracting: A Guide Through the Federal Procurement Maze, Fifth Edition
Getting Started in Federal Contracting: A Guide Through the Federal Procurement Maze, Fifth Edition

An insider's tip book about getting started with federal contracting. Great tips and tricks for those new to government contracts.

 

Comments 3 comments

jaymelee23 profile image

jaymelee23 6 years ago from United States

Never heard of this or the government using Naics does for that matter. Great hub.


Frustrated Contractor 6 years ago

NAICS codes: No wonder people don't trust the government. The codes were intended for gathering business statistics, but now acquisition folks use them to parcel out gov business. The problem is that they're meaningless. Good example: 517911; Telecomms Reseller. OK: Data network people maybe, also Nextel-Sprint, Verizon and AT&T and others. BUT YOU CAN BE A "SMALL BUSINESS" IF YOU HAVE LESS THAN 1500 EMPLOYEES and you have the 517911 NAICS code. That could be a company anywhere from $150M to $180M. Huh? Don't laugh; I've seen them. And according to your article above, if you don't have that NAICS code, well, just add it, right? Sounds easy. But the gov't is handing out millions of dollars in contracts to "small businesses" which are defined, separated and pigeon-holed by these "easy to get" NAICS codes. It's a confusing, frustrating mess.


stewed 5 years ago

Another tool used by the elitists to control our every move....if don't think so...just look around - they can tell where you are or have been for the last year just by your phone alone....no need for this classification.

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