Regular NAICS code reviews in SAM.gov are essential for federal contractors seeking to maintain visibility for relevant opportunities. Contractors should check codes quarterly by accessing the Core Data tab, ensuring their primary code represents at least 50% of business activities and removing obsolete classifications. Accurate codes determine which solicitations appear in opportunity feeds, affect size-standard qualifications, and help prevent disqualification during post-award audits. The following guidance will equip contractors with specific steps for effective code maintenance.
Why Regular NAICS Code Reviews Matter for Federal Contractors
Every successful federal contractor recognizes that NAICS code accuracy forms the foundation of effective government contracting. These codes serve as the gateway to opportunities, determining which solicitations appear in a contractor’s SAM.gov feed and which set-aside programs they qualify for.
Regular reviews of NAICS codes guarantee regulatory compliance with federal procurement requirements, preventing disqualification from contract awards due to outdated or mismatched codes. As market trends evolve, particularly in emerging sectors like renewable energy and cloud computing, new codes are introduced that could reveal previously inaccessible opportunities.
Regular NAICS code maintenance isn’t just about compliance—it’s your gateway to emerging market opportunities that competitors might miss.
Federal agencies filter vendors by NAICS codes, meaning incorrect registrations can result in automatic rejection of bids, wasting valuable proposal resources. Additionally, SAM.gov audits may flag inactive codes during renewal periods, potentially causing administrative delays. Remember that the six-digit primary NAICS code is particularly crucial for determining eligibility in federal government contracting programs.
For strategic positioning, contractors should analyze their codes quarterly to align with agency forecasts and competitive landscapes. Since NAICS codes are self-assigned identifiers, businesses have the responsibility to select the most appropriate classifications for their operations. Setting up calendar reminders for regular NAICS code reviews alongside your annual SAM verification will ensure your business maintains continuous eligibility for relevant government opportunities.
How to Conduct an Effective NAICS Code Review in SAM
Understanding the practical steps for reviewing NAICS codes in SAM.gov transforms compliance from a challenge into a strategic advantage.
Effective code auditing begins by logging into SAM.gov and directing to the Core Data tab, where contractors can locate and review their primary and additional NAICS classifications.
A thorough review requires cross-referencing codes with the U.S. Census Bureau‘s NAICS search tool using relevant industry keywords. Contractors should confirm that their primary code accurately represents at least 50% of business activities, while removing any obsolete codes that no longer match their capabilities. This process ensures proper classification of businesses for statistical data collection and government contracting purposes.
NAICS codes undergo a comprehensive review every five years by the Economic Classification Policy Committee to address economic changes and update industry classifications.
Compliance checks should include running a SAM.gov entity report to review publicly visible NAICS data and comparing codes against FPDS-NG historical contract data. Maintaining active status in SAM is equally crucial, as an inactive registration can prevent businesses from bidding on federal contracts regardless of NAICS code accuracy.
Establishing a quarterly review schedule, especially for businesses pursuing multiple agency contracts, guarantees ongoing accuracy and alignment with evolving business operations.
The Impact of NAICS Code Accuracy on Contract Opportunities
Accurate NAICS codes serve as critical gateways to federal contracting success, directly determining which solicitations appear in a contractor’s opportunity pipeline.
These codes affect contract eligibility by matching business capabilities with specific procurement requirements, creating a direct link between code accuracy and business growth.
Misaligned NAICS codes create significant consequences:
- Missed Opportunities – Incorrect codes filter out relevant solicitations, preventing businesses from seeing contracts they could successfully perform.
- Competitive Disadvantages – Inaccurate codes place businesses in inappropriate size categories, forcing competition against larger organizations.
- Compliance Risks – Errors may trigger disqualification during post-award audits, jeopardizing contract performance.
- Market Analysis Limitations – Faulty codes compromise data used for strategic planning, leading to misguided business development efforts.
Organizations that maintain precise NAICS classifications gain significant advantages in targeting appropriate contracts and positioning themselves effectively against legitimate competitors. With small businesses receiving nearly half of GSA/VA Schedule awards compared to less than 20% of overall federal contract awards, accurate NAICS coding becomes especially crucial for smaller contractors seeking government business. Regular review and updating of NAICS codes is essential as the hierarchical structure allows for detailed categorization that properly reflects a company’s evolving business activities. Maintaining current NAICS information is a crucial component of the SAM maintenance process that ensures continued eligibility for government opportunities.
Frequently Asked Questions
Can a Supplier Protest a NAICS Code Assigned to a Solicitation?
Yes, suppliers can protest a NAICS code assigned to a solicitation.
Affected parties must file protests within 10 days of solicitation issuance through the SBA’s Office of Hearings and Appeals, not GAO.
Protests must demonstrate that the assigned code doesn’t match the principal nature of the procurement work.
If successful, OHA can direct the contracting agency to revise the NAICS code.
Suppliers should act promptly due to the strict filing deadline.
What Happens if My Primary NAICS Code Expires or Changes?
NAICS codes themselves don’t expire, but they undergo updates approximately every five years.
When a company’s primary NAICS code changes during these updates, businesses must revise their SAM.gov profile to reflect current industry classifications.
Failing to update NAICS code information may result in missed contracting opportunities, reduced visibility to government buyers, and potential eligibility issues for specific contracts.
Companies should review their NAICS codes annually, especially when business operations change, to maintain accurate representation in government procurement systems.
Do State and Local Government Contracts Use NAICS Codes?
Unlike federal contracts, state and local contracts do not consistently use NAICS codes.
While some state and local governments adopt NAICS for certain projects, particularly those with federal funding connections, most use their own classification systems.
Many municipalities rely on alternative frameworks or modified SIC codes instead.
Businesses pursuing state contracts or local contracts should research the specific classification requirements for each jurisdiction rather than assuming NAICS codes will be required.
How Do NAICS Codes Affect My Business Tax Classification?
NAICS codes greatly influence business tax classification by determining how the IRS categorizes a company.
These codes affect eligible business deductions, as different industries have specific allowed expenses. Tax implications extend to audit risk assessment, as the IRS uses NAICS codes to compare businesses within the same sector.
Proper classification guarantees companies can claim appropriate deductions while maintaining compliance with industry standards. Incorrect codes may trigger IRS scrutiny if expense patterns deviate from industry norms.
Can I Add International Business Activities to My NAICS Classification?
Businesses cannot directly add international activities to NAICS classifications, as these codes represent business activity types rather than geographic scope.
However, companies engaging in international trade can select appropriate NAICS codes that align with their activities, such as export financing (522293) or global logistics services.
When pursuing business expansion overseas, organizations should choose codes that accurately reflect their primary economic activities, regardless of whether those activities occur domestically or internationally.