Glossary
NAICS
NAICS is the North American Industry Classification System code used to categorize the type of work performed under a federal contract.
Also known as
Definition
The North American Industry Classification System (NAICS) is a standardized code system used by the federal government to classify businesses and contracts by industry sector and subsector. Each NAICS code is a six-digit number that identifies the primary type of economic activity involved. In federal procurement, agencies assign a NAICS code to each contract action to specify the principal purpose of the contract. This classification supports reporting, market research, and regulatory compliance.
Why it matters
NAICS codes are essential for identifying the industry focus of federal contracts, enabling market segmentation and targeted analysis. They are critical for determining small business eligibility, setting aside opportunities, and tracking spending by industry. Accurate NAICS assignment affects competition, compliance, and the ability to analyze trends across sectors. Researchers and vendors rely on NAICS codes to find relevant opportunities and understand federal demand.
How it appears in FPDS
In FPDS, NAICS codes appear as a required data element on each contract action, typically labeled as 'NAICS' or 'NAICS Code.' Users can filter, group, or search contract records by NAICS to analyze spending patterns, vendor participation, or agency buying behavior by industry category.
Common misunderstanding
A common misunderstanding is that a contract can have multiple NAICS codes, but FPDS records only allow one primary NAICS code per action. Another confusion is assuming NAICS codes are unique to federal procurement, when they are actually used across North America for economic classification.
Example
A contract for IT software development may be assigned NAICS code 541511 (Custom Computer Programming Services). Analysts can use this code to identify all contracts for similar services across agencies.
Use in FPDS Query
Analysts often use NAICS codes as filters in FPDS queries to isolate contracts within a specific industry, assess market size, or evaluate competition among vendors in a targeted sector.
Related search intent
Related terms
PSC
A PSC (Product Service Code) is a standardized four-character code used to classify products, services, and research purchased by the U.S. federal government.
Set-Aside
A set-aside is a federal procurement action that reserves an acquisition exclusively for eligible small businesses or specific socioeconomic groups.
Updated: Mar 17, 2026