Friday, September 14, 2012

NAICS Codes - In General

The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. It is also used by the Federal Government for contracting purposes. The official NAICS website can be found here.

NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) system. Every five years, the Economic Classification Policy Committee (ECPC), an inter-agency committee established by the OMB. During its review, the ECPC determines the feasibility and adherence to the underlying principles of NAICS, determines if the proposed changes are acceptable, and makes final recommendations to OMB for additions and changes to the NAICS manual. The ECPC recently completed its five year review and has published its 2012 NAICS manual.

The Small Business Administration (SBA) is responsible for developing size standards for each NAICS category on an industry by industry basis. Before a size standard is made available for use by industry, the SBA must solicit comments from the public through the rule-making process and then coordinate with the General Services Administration to update the associated acquisition systems, to reflect industry size standars that have been adopted for new NAICS codes. SBA publishes the corresponding industry size standards on their website.

Contracting officers must identify, in the solicitation or request for proposal, both the NAICS code that best describes the principal nature of the product or service being acquired and the size standard that has been established by the SBA for the NAICS code so that offerors can correctly represent themselves as a large or small business concern.

The process used by OMB/ECPC for developing new NAICS codes and the process used by SBA to approve size standards for new NAICS codes, are not performed simultaneously. Therefore, it is important to note that new NAICS codes are not available for use in Federal contracting until SBA publishes corresponding industry size standards.

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