NAICS codes/Size based shaping


How big can you be and still count as a small business?

That question is the core of this shaping strategy, and the answer changes depending on the work being done. And to under this shaping technique we need to spend a minute on NAICS codes and how the government sets the NAICS code for each solicitation.

An overview of NAICS codes

What are NAICS codes: NAICS codes are a suite of roughly 1,200 six digit codes with one one code for each industry. For example “Computer Systems Design and Related Services” are NAICS code 541510
NAICS and size: Every NAICS code has a revenue or an employment ceiling, and if you exceed that ceiling you are no longer small. So if you do both accounting and construction you could be a small business when bidding on construction contracts, and a large business when bidding on accounting contracts
NAICS code sizing is irrational: Very similar NAICS codes can have wildly different ceilings. For example:

NAICS codeIndustrySize limit
541810Advertising Agencies$22.5
541820Public Relations Agencies$16.5
541830Media Buying Agencies$28.5
541840Media Representatives$18.5
541850Outdoor Advertising$30.5

How a contract gets it’s NAICS code. The government:

  1. Has a need
  2. Does some market research to understand who could provide solutions
  3. Looks at the NAICS codes related to the solution space
  4. Chooses (or is influenced to choose) the best one

Identify your differentiators/ strengths

  1. Identify all your NAICS codes: Make a list of all the NAICS codes related to your product or service
  2. Find the size ceiling for each: Use the NAICS size standard chart for each code
  3. Self assess against each: Identify in which codes you are small
  4. Find your preferred code: Find the NAICS code that is best for you:
    1. Has a size ceiling that is high enough that you qualify as small
    2. Has the lowest ceiling of all the NAICS codes you identified to lock out as many competitors as possible

Review the upcoming acquisition

  • Forecast items: Items listed in an agency forecast may contain the government’s current NAICS plan
  • Re-competing items: The governments generally defaults to the NAICS of the previous generation of the contract. For more on re-competing contracts see our classes on how the government buys
  • RFIs: When the government releases an RFI they typically share the anticipated NAICS
  • Sources Sought: When the government releases an Sources Sought they typically share the anticipated NAICS

Why your differentiator/strength helps the government

  • Tough sell: Honestly it is hard to frame a recommended NAICS code in terms of how it will help the government. The best option is to make the case that your recommended NAICS code is more aligned with the work in the contract than the NAICS code they planned to use.
  • Path of least resistance: If you make it sound like you’ve really done your home work and your recommended NAICS code is more appropriate there is a reasonable chance that the government will just take your recommendation

A special note on WOSB

The woman owned small business set-aside can only be used with certain NAICS codes so if you are a WOSB be sure to check the next code that the government intends to use to ensure that it is one of the codes that you can that can be applied to women on small businesses

Other resources (Individual contract checks)

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List of further reading

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