In the business of federal contracting, there is a system of codes that dictate not only the type of products and services to be contracted but also the type of companies that can compete for a contract.
These codes -- known as the North American Industry Classification System and commonly referred to as NAICS Code -- are determined for each contract based on the item or service to be procured and used in the market research prior to announcing a requirement for bid competition.
The codes are so important to the bidding process that AMCOM's Office of Small Business Programs makes it a priority to review all NAICS codes assigned to AMCOM requirements.
"Federal procurement uses these codes to designate what product or service they are intending to buy," said Todd Couch, an AMCOM small business specialist. "The code is also used to define companies based on the activities in which they are primarily engaged.
"During the market research phase for a new contract, requiring elements will use the NAICS code to make sure they get a viable number of bidders that can actually produce the product or perform the service. They use the best NAICS code that best describes the principle nature of what the government needs."
Any AMCOM project office that needs a contract to procure products or services uses NAICS codes in their market research process. Once the NAICS code is determined for a requirement, the project office will use the code to solicit companies that are interested in bidding on the requirement.
The AMCOM small business office reviews the codes to determine if there is adequate competition to set aside the requirement for small business," said Donna Ragucci, director of AMCOM's Office of Small Business Programs, referring to Federal Acquisition Regulation 19.502-2 (b).
Each acquisition of supplies or services that has an anticipated dollar value exceeding $3,500 ($20,000 for acquisitions as described in 13.201(g)(1)), but not over $150,000, ($300,000 for acquisitions described in paragraph (1) of the Simplified Acquisition Threshold definition at 2.101), is automatically reserved exclusively for small business concerns and shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery.
If the contracting officer does not proceed with the small business set-aside and purchases on an unrestricted basis, the contracting officer shall include in the contract file the reason for this unrestricted purchase.
"It is important that we get the NAICS code correct and that we determine what contracts should be small business set asides because AMCOM has small business goals on not only small business, but also the socioeconomic subsets under the Small Business umbrella," Ragucci said. "Those subsets are Small Disadvantaged Business (SDB), Women-Owned Small Business (WOSB), HUBZone small business (HUBZone), and Service-Disabled Veteran-Owned Small Business (SDVOSB).
"The government is required by law to have a portion of contracts obligated on a yearly basis as set asides for small business or one of the subset categories."
AMCOM's goal is to have 11 percent of its contracts awarded to small business.
Small businesses can compete for any contract put out for bids, known as full and open competition. But, it is difficult for small businesses to compete among large businesses. To even the playing field, only small businesses can bid on small business set asides competitively, and the NAICS helps distinguish what work a small business can do.
The NAICS code for each requirement determines the size of a small business.
"A company can be considered large in one NAICS code and small in another," Couch said. "NAICS codes have different size standards. That's why it's important to choose the correct NAICS code."
Some codes are based on the number of employees a company employs. Others codes are based on a revenue standard.
"If an incorrect NAICS code is chosen, a small business can be eliminated from the competition. And, you can have protests from companies if you don't use the correct code," Couch said. "The code is based on the majority of the work as defined in the statement of work."
Selecting the correct NAICS will help in achieving the AMCOM small business goals.
"We are looking out for small business," Ragucci said. "We need to work toward meeting the AMCOM small business goals and to make sure a fair portion of all AMCOM awards are given to small businesses."
The Federal Acquisition Regulation: FAR 19.102 provides size standards, along with the Code of Federal Regulations 13 CFR 121 and additional information on NAICS Codes and where to find the latest version of the NAICS to Size Standard list. A more in-depth definition, is found in the North American Industry Classification System (NA) Manual (http://www.census.gov/epcd/www/naics .html). The SBA establishes small business size standards on an industry-by-industry basis. (See 13 CFR 121). Small business size standards matched to industry NAICS codes are published by the Small Business Administration and are available at http://www.sba.gov/content/table-small-business-size-standards .
Editor's Note: AMCOM employees needing additional information, can contact Todd Couch at jesse.t.couch.civ@mail.mil .
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