Navigating NAICS

NAICS (the North American Industry Classification System) codes, pronounced “NAKES” can have a profound impact on SDMWVLGBTBEs (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprises) for a bunch of reasons.

NAICS is a shorthand description of your business’s good and services used by many of the US certifying agencies. There have been previous versions of this codes system (1997, 2002, 2007, 2012 and in our olden days it was called SIC for standard industry code), but the most recent version is the 2017 codes and what they mean can be found on the US Census website.  You can enter keywords about your business’s services to determine what the associated code might be.  For our example, we decided everyone has probably visited a “food truck” which got zero results.  “Restaurant” delivered 25 options and “food” a whopping 139 where we found NAICS 722330 Mobile Food Services: This industry comprises establishments primarily engaged in preparing and serving meals and snacks for immediate consumption from motorized vehicles or non-motorized carts. The establishment is … primarily engaged in providing food services from vehicles, such as hot dog carts and ice cream trucks.

We often suggest that SDMWVLGBTEs find all of the NAICS codes that might be related to their goods and services.  Order them by the best fit/description of every day offerings to less offered items.  The best one is likely to be the primary NAICS codes, but there may be some really close runners up.   For our business we have three top codes:

• 541511 Computer software analysis and design services – engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer.
• 541512 Computer software consulting services or consultants – engaged in planning and designing computer systems that integrate computer hardware, software, and communication technologies.
• 611420 Computer Training  –  engaged in conducting computer training (except computer repair), such as computer programming, software packages, computerized business systems, computer electronics technology, computer operations, and local area network management.

It seems clear that these codes overlap, and our other four are subsidiary but related to these services.

The bunch of reasons we mentioned? Most certifiers will want you to be able to prove that your business and its diverse owners are capable of delivering the goods or services associated with your NAICS codes.  Sometimes, this can be a subjective area for discussion.  Do the owners of a traffic flagging business have to go out and flag cars in a construction zone? Depends on the certifier, but the owner(s) better be versed in the practice of providing the flagging services, be able to hire and manage flaggers, own the equipment used by the flaggers and the business needs to be able to deliver those services in a timely and professional manner.

Customers, especially government agencies or large corporations, are likely to release requests for proposals or invitations to bid by NAICS codes and key words.  If you follow some FedBizOps requests for information or sources sought, you may have noticed language like “The proposed NAICS for this effort is 541612 (size standard $15M) Human Resources Consulting Services. Comments on this NAICS and suggestions for alternative codes must include supporting rationale.”  This particular information sought request was for a software system.  We ended up suggesting a few alternatives. While Human Resources Consulting makes sense given the subject matter of this notice, we would recommend inclusion of codes for software and system development given DHRA’s desire for a web-based EEOC Complaint Case Management System. These might include: 541611 Records Management; 541511 Software analysis and design services, custom computer; 541512 Computer systems integrator services; 541519 Software installation services, computer; or 518210 Data Processing, Hosting, and Related Services. This approach will give them a broader base of potential responders with excellent solutions.

NAICS seem to be getting a little more fluid.  Every edition has changes to or expanded descriptions, or new numbers with new or similar descriptions. When new codes are released you’ll want to review the NAICS web site to reconfirm to you existing codes, look for additional applicable codes, or if you have a new product or service to find the appropriate code.

That said, requesting a new code from a certifier can be difficult, particularly if the product or service is significantly different from your traditional offerings. We always recommend that SDMWVLGBTBEs request any and all codes they believe applicable with their initial application. The certifier may ask why a particular NAICS was selected then determine, based on your explanation, whether or not to include that code as a part of your certification.

Your certification letter or certificate lists all NAICS the certifier has approved.  Be sure to verify your codes when you get the certificate.  We know of an instance when a state agency changed a SDMWVLGBTBE’s code to 561320 Labor (except farm) contractors (i.e. personnel suppliers) when his actually requested code was 54512 Computer software consulting services or consultants.  Getting it fixed was harder than getting certified in the first place!

Know your codes – you’ll never know when they may be requested. And to make it easier for potential customers list your NAICS on your web site and capabilities statement.