NAICS and PSC codes are a collection of numbers, letters and requirements that confuse even the most seasoned veteran, but they are key to success in government contracting. Why? Because these commodity codes provide a useful taxonomy for organizing industries and reporting government contract spending within them.
You can use them to qualify for small business set asides and learn what your target agencies spend on contracts, but only if you learn how to use them. Stay with us, and we’ll take you through:
- The purpose of NAICS and PSC Codes
- How and why governments use commodity codes
- What tools are available to you in determining your business codes
Now let’s unlock some codes!
What is a NAICS Code and How do I use it?
NAICS stands for the North American Industry Classification System, and it is one of the government standards for, you guessed it – classifying a business! The codes contain six numbers which are organized into a system set of their own.
Each of the numbers corresponds to a set of keywords that can describe your business and products. For example, typing in the NAICS code 541199 into GovShop.com would show you companies under Legal Services.
If you’re following along, I’m sure the next question you’ll have is – which code is right for my company? The beauty in this system is that it’s self-assigned. If your company deals with consulting, there are plenty of options like Management Consulting Services, Project Management, Administrative Management, and more.
You are welcome to select multiple NAICS codes that apply to your business, but you’ll only need one to register your business with the System for Award Management. If your company has a variety of services, make sure to designate NAICS codes to match your focus. As your business grows and evolves, the NAICS code will change with it, so it’s important to keep your company’s information up to date. You can always update your SAM.gov registration in the future
More information about NAICS codes can be found here in the 2017 manual hosted on census.gov.
What is a PSC Code and How do I use it?
Now that you understand NAICS codes, what other codes should you understand? PSC codes! Product and service codes are very straightforward and help a business easily describe their ‘what’ to government buyers. These codes need less description than NAICS but are no less useful to the savvy supplier.
A topical example: In searching for Medical and Surgical Instruments, a government buyer would search for PSC Code 6515 and see a group of companies that offer a variety of products under medical supplies. If you, as the company, are looking to sell Unmanned Aircraft, you would be able to use one of the tools described below to search and find the code 1550 that notates drones for multiple purposes.
The PSC Manual is updated on a regular basis, and it’s important to keep up with some of the changes that occur. According to GSA Interact, 155 new research and development codes, 40 new IT Codes, and 2 new product codes are in the October 2020 update. Similarly, 721 research and development codes and 68 IT Codes are now end-dated. This is necessary to note, as your products should be up to date for the best results.
Why? Because contracting officers are using them to make market research decisions like small business set-asides.
How and Why Does the Government Use Product and Service Codes?
Just as you don’t search blindly for opportunities, government buyers can’t search endlessly for companies to fit specific requirements. Product Service Codes can serve as the first major filter in a search of companies to invite to future government contracting opportunities. Filtering out companies that work on medical equipment when you’re looking for someone to service a fleet of drones can be exponentially time-saving.
Buyers are also able to use the taxonomies of each in unique ways. For example, NAICS codes are almost exclusively used to determine small business set aside eligibility, while PSC codes are focused intentionally on market research and contract reporting. Some of this data is analyzed and published on government websites like USASpending and the Federal Procurement Data System (FPDS). Other companies can use this information to see their competition or create target marketing lists of potential subcontractors.
Is one code more useful than the other?
Simply put, no. NAICS Codes are for the business function and PSC Codes are for the product itself. Each has a purpose and should be utilized appropriately. Furthermore, government contracting professionals use them differently in market research. For a successful working relationship with the government, you should be as versed as possible in both codes. Using each correctly gives you and your business more chances of visibility while reducing some introductory questions that would be necessary otherwise.
What tools can I use to determine the best codes for my business?
You’ve made it! This list of tools will be action items to take with you. Create opportunities for your business through some simple market research tips.
- Govshop.com is a user-friendly place to search for keywords and codes that are right for you. Simply search your terms under the Commodity Codes function and find direct matches for NAICS, PSC, and more. Training is available and you have free access to a type of digital capability statement that can be useful to government agencies.
- Census.gov can help with related keywords in your initial search for the right codes.
- DoD Procurement Toolbox offers specifics on the PSC Codes for your products, training is available.
Now that you’re informed and equipped with the skills to move forward, go, and unlock those opportunities!
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