On April 18, 2017, the U.S. Small Business Administration (SBA) published a proposed rule in the Federal Register to amend its regulations to adopt and incorporate the U.S Office of Management and Budget’s (OMB) North American Industry Classification System (NAICS) revisions for 2017, identified as “NAICS 2017.” SBA proposes to adopt the updated table of size standards effective October 1, 2017, to coincide with beginning of the government’s next fiscal year.
NAICS 2017 creates 21 new industries by reclassifying, combining or splitting 29 existing industries under changes made in “NAICS 2012.”
SBA’s proposed size standards for the 21 new industries have resulted in an increase in size standards for six NAICS 2012 industries and part of one, a decrease to size standards for two, a change in the size standards measure from average gross annual receipts to average number of employees for one industry. There are no changes for 20 industries and part of one.
SBA included six tables in its proposed rule showing the changes, which occur in the following NAICS Sectors: 21, Mining; 33, Manufacturing; 45, Retail Trade; 51, Information; 53, Real Estate and Rental Leasing; 54, Professional, Scientific, and Technical Services; and 72, Accommodation and Food Services. We recommend consulting these tables if your business is engaged in one of these NAICS Sectors to determine if your business is impacted by the changes.
A note to large business prime contractors with Small Business Subcontracting Plans: These changes could also impact the size status of your suppliers and subcontractors which may impact your ability to meet your Small Business Subcontracting Goals.
Why are NAICS Codes Important to Federal Contractors?
NAICS classifies business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. economy. NAICS Industry Codes define establishments based on the activities in which they are primarily engaged.
NAICS Codes are important in the conduct of U.S. Government procurements, as a NAICS Code is assigned to each procurement by the procuring contracting officer. NAICS Codes have a size standard assigned by SBA which will determine whether a business is small or other than small (large) business in response to a government procurement. Companies may be a small business under one NAICS Code, and other than small (large) business under another. Click here to view SBA’s Size Standards Table, updated February 26, 2016.
The corresponding size standard to a NAICS Code assigned by the contracting officer to a government procurement is especially important when the procurement is conducted using a set-aside for small business, as it will determine a company’s eligibility to participate under a small business set-aside.
More Information on NAICS Codes
Visit the U.S Census Bureau’s North American Industry Classification System website where you can use their useful tool to search NAICS by key word, sector, or NAICS Code:
About the Author:
Wayne Simpson is a seasoned former Federal executive and acquisition professional who is also a highly-motivated and demonstrative small business advocate, with nearly 38 years of Federal Civilian Service with the U.S. Department of Veterans Affairs (VA), and its predecessor organization, the Veterans Administration.