NAICS, The Final Frontier: OHA Rejects NAICS Size Standard Exception as Inapplicable to NASA Solicitation

This matter again involves NASA and a particularly interesting government procurement, this time concerning NAICS appeals. NAICS codes, or the North American Industry Classification System codes, are how both businesses are classified by their industry and procurements are classified by what they’re for. If the procurement uses an inappropriate NAICS code, a protestor can appeal this code determination. It is important to note that some NAICS codes have “exceptions” which can affect their corresponding size standards. For example, NAICS code 541330, “Engineering,” has a size standard of $16.5 million, but, if the engineering services are for military equipment and weapons, an exception applies that balloons the size standard to $35.5 million. But, just like regular NAICS codes, these exceptions have to make sense in light of the kind of solicitation in question, leading us to this matter.

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NAICS Code Challenges Must Show why the Code Chosen is Incorrect, OHA Says

We’ve all seen cases of agencies assigning NAICS codes to solicitations that just seem…off. But, unless a contractor can show that the code chosen was clearly erroneous, government contractors will simply have to make do with what they’ve been given. The OHA recently handed down a decision confirming this.

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OHA: Engine Repair Isn’t the Same as Engine Overhaul for NAICS Code Purposes

Contracting officers are given significant discretion in choosing NAICS codes for procurements. But, as decision makers, they aren’t infallible. As a recent OHA case shows, using the NAICS Manual can help small business contractors challenge an incorrect NAICS code.

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NAICS Code Appeals: Infrequent, but Often Successful

Because the NAICS code governs the size standard used to determine whether a company qualifies as a small business, the choice of a NAICS code can dramatically affect the competitive landscape for a set-aside acquisition.

The only legal procedure for challenging the NAICS code assigned by the contracting officer is to appeal the assignment to the SBA’s Office of Hearings and Appeals. A NAICS code appeal can be an extraordinarily powerful tool for a business to challenge whether a contracting officer assigned the correct NAICS code in setting aside a procurement.

So how often are NAICS code appeals filed, and how often do these NAICS code appeals succeed? A recent GAO report has some answers.

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