NAICS Codes Explained: A Complete Guide for Government Contractors

What Are NAICS Codes?

NAICS stands for the North American Industry Classification System. It's a standardized numbering system used by the United States, Canada, and Mexico to classify business establishments by their primary type of economic activity. Think of it as the government's way of categorizing what every business does — from almond farming (111920) to software publishing (511210) to janitorial services (561720).

NAICS codes are 6-digit numbers organized in a hierarchical structure:

• First 2 digits: Economic sector (e.g., 54 = Professional, Scientific, and Technical Services)
• First 3 digits: Subsector (e.g., 541 = Professional, Scientific, and Technical Services)
• First 4 digits: Industry group (e.g., 5415 = Computer Systems Design and Related Services)
• First 5 digits: Industry (e.g., 54151 = Computer Systems Design and Related Services)
• All 6 digits: National industry (e.g., 541512 = Computer Systems Design Services)

The system is maintained by the U.S. Census Bureau and is updated every five years (the most recent revision was in 2022). There are over 1,000 unique 6-digit NAICS codes covering every type of business activity in the economy.

Why NAICS Codes Matter for Government Contracting

In government contracting, NAICS codes serve three critical functions:

1. Contract Classification

When a federal agency posts a contract opportunity on SAM.gov, they assign it a primary NAICS code. This code determines which category of business the agency is looking for. If you're an IT firm and the contract is posted under a construction NAICS code, that contract isn't meant for you — regardless of what the description says.

2. Small Business Size Standards

The SBA assigns a size standard to each NAICS code that determines the maximum revenue or employee count to qualify as a "small business" for that type of work. Size standards vary significantly. Under NAICS 541512 (Computer Systems Design), a small business can have up to $34 million in average annual revenue. Under NAICS 236220 (Commercial Building Construction), the threshold is $45 million. Under NAICS 511210 (Software Publishing), it's 1,250 employees.

This matters because set-aside contracts — reserved exclusively for small businesses — use the NAICS code's size standard to determine eligibility. You might be "small" under one NAICS code and "large" under another.

3. Opportunity Discovery

When you search for contracts on SAM.gov or through any contract alert tool, NAICS codes are the primary filter. Your SAM.gov registration lists the NAICS codes you're capable of performing. Smart matching tools (including GovConToday) use these codes to find opportunities that align with what your business actually does — as opposed to keyword searches that match on stray word occurrences.

How to Find Your NAICS Codes

The official NAICS lookup tool is at census.gov/naics. You can search by keyword to find codes that match your business activities. Here's a practical process:

1. Start with your primary service or product. What does your business do most of the time? If you're a software development firm, search for "software" or "computer programming" on the NAICS lookup site.
2. Review the results carefully. Read the full description of each code, not just the title. The description specifies what's included and, crucially, what's excluded. NAICS 541511 (Custom Computer Programming Services) covers writing code to client specifications. NAICS 541512 (Computer Systems Design Services) covers designing and integrating hardware and software systems. They sound similar but describe different work.
3. Add adjacent codes. Most businesses do more than one thing. A cybersecurity firm might use 541512 (Computer Systems Design), 541519 (Other Computer Related Services), and 561621 (Security Systems Services). Listing these adjacent codes expands your opportunity pool.
4. Check the size standards. For each code you select, look up the SBA size standard at sba.gov/size-standards. Make sure you qualify as a small business under each one.
5. Look at what similar companies use. On SAM.gov, you can look up other businesses in your industry and see which NAICS codes they've registered under. This is a useful sanity check.

Common NAICS Code Mistakes

After working with hundreds of small business government contractors, here are the mistakes we see most often:

Mistake 1: Using Only One NAICS Code

Many businesses register with a single NAICS code, usually the one that most obviously describes their primary work. But government agencies don't always classify opportunities the way you'd expect. An agency might post an "IT help desk" contract under 541512 (Computer Systems Design) or under 561320 (Temporary Help Services) depending on how they structure the requirement. If you're only watching one code, you miss the other.

Most successful small contractors register with 3-8 NAICS codes that cover their primary capabilities and adjacent work they can perform.

Mistake 2: Going Too Broad

The opposite problem: registering under 15-20 NAICS codes to "cast a wider net." This backfires because you'll receive alerts for work you can't actually perform, and contracting officers who review your SAM.gov profile may question your credibility. If you're an IT firm also registered under food service and construction codes, it raises red flags.

Stick to codes where you have genuine capability and past performance (or could credibly perform the work).

Mistake 3: Ignoring Size Standards

Remember, size standards vary by NAICS code. A $30 million IT firm is "small" under 541512 (Computer Systems Design, $34M threshold) but might not be under a different code with a lower threshold. If you register under a code where you exceed the size standard, you can't compete for small business set-asides under that code — and misrepresenting your size is a serious compliance issue.

Mistake 4: Never Updating Your Codes

NAICS codes are updated every five years, and your business evolves too. If you registered on SAM.gov three years ago and haven't reviewed your codes since, you might be missing new codes that better describe your current capabilities — or clinging to codes for work you no longer do. Review your NAICS codes at least once a year, ideally when you renew your SAM.gov registration.

Using Multiple NAICS Codes to Cast a Wider (Smart) Net

The most effective strategy is to select a focused set of NAICS codes that represent your real capabilities, then use those codes as the foundation for automated opportunity matching.

For example, a managed IT services company might register under:

• 541512 — Computer Systems Design Services (their core work)
• 541511 — Custom Computer Programming Services (when they build custom tools for clients)
• 541513 — Computer Facilities Management Services (for managed hosting contracts)
• 541519 — Other Computer Related Services (catch-all for IT work that doesn't fit elsewhere)
• 518210 — Computing Infrastructure Providers, Data Processing, Web Hosting (for cloud-related contracts)

These five codes create a comprehensive net that captures IT contracts across different categorizations — without straying into unrelated territory.

How GovConToday Uses NAICS Codes for Matching

When you sign up for GovConToday, the first thing we ask for is your NAICS codes. These codes become the foundation of your match profile. Every morning, we pull new opportunities from SAM.gov and match them against your codes — combined with your set-aside preferences and target states — to build a personalized daily digest.

On the free plan, you can set up to 3 NAICS codes. For most solo consultants or narrow-focus firms, that's enough to cover your primary work. On the Pro plan ($29/mo), you can use unlimited NAICS codes, which is ideal for firms with broader capabilities or those working across multiple service lines.

The key difference between GovConToday and raw SAM.gov searching is context. When we surface an opportunity, we tell you which of your NAICS codes it matched, whether it's set aside for your certification type, and when the deadline is. You don't have to click through and read the full solicitation just to figure out if it's relevant. The matching is done for you.

Key Takeaways

• NAICS codes are the government's standard for classifying business activities. Every contract opportunity is tagged with at least one NAICS code.
• Use the Census Bureau lookup at census.gov/naics to find your codes. Read the full descriptions, not just the titles.
• Register with 3-8 NAICS codes that cover your real capabilities — not too narrow (you'll miss opportunities) and not too broad (you'll lose credibility).
• Check size standards for each code to make sure you qualify as a small business under each one.
• Review and update your NAICS codes at least once a year as your business evolves.
• NAICS-based matching (like GovConToday) is more precise than keyword-based searching because it starts from what your business does, not from a word that might appear in any context.