Why do we use NAICS codes?
The government released Federal Acquisition Regulations (FAR) rules associated with small business requirements. For this particular change, FAR 19.301-1, FAR 52.219-9 and 13 CFR 125.3 requires all formal solicitations, as well as the purchase orders, have the proper NAICS code and the size standard on each piece of documentation. Prior to the work being performed, the small business supplier awarded the purchase order must have a matching NAICS code along with its self-certified size according to the Small Business Administration’s (SBA) size standard in order to be counted as small business.
Changes were made to Exostar, LMP2P and eRFX systems as well as procedures to help match the NAICS code and sized standard to the work to be performed. These changes include the solicitation, quotations and proposals, as well as the purchase order in LMP2P. For those individuals not using eRFX or releases a quotation outside of the system, a detailed process was identified. Since Aeronautics and RMS-Sikorsky businesses are not on the LMP2P system, separate processes were developed.
What is a NAICS code?
NAICS is a two- through six-digit hierarchical classification system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry. The five-digit NAICS code is the level at which there is comparability in code and definitions for most of the NAICS sectors across the three countries participating in NAICS (the U.S., Canada, and Mexico). The six-digit level allows for the U.S., Canada, and Mexico each to have country-specific detail. A complete and valid NAICS code contains six digits.
Where do I provide applicable NAICS codes?
Upon accessing your Exostar TPM supplier profile, go to the Self-Certification tab on the left hand side. Go to the “Browse & Add” button (above) to enter each NAICS Code. Exostar allows a supplier the ability to list all of the company’s NAICS codes and to self-certify the size for each NAICS code, per the SBA’s size standards. In addition, the system requires the supplier to certify the authorized individual to attest to the accuracy of the NAICS code and size standard representations. The system maintains a record of when the authorizer certifies its representation as well as the name of the individual, title and date of certification.
It is also recommended for the supplier to update its Lockheed Martin Supplier Marketing Portal profile. The Lockheed Martin Supplier Marketing Portal is the corporation’s primary system for sourcing for suppliers for procurement opportunities.
How Do I Update my Profile in Exostar to Add My NAICS Codes?
To update your Exostar profile you must be an Org Admin for your company. If you are, please go to https://portal.exostar.com and sign in with your credentials. Click on “My Account” tab and then click on “View Organization Details” sub-tab. On the View Organization Details tab, click on the “View in Trading Partner Management (TPM) link. NAICS code selection is located under the “Self-Certification” tab.
If you do not choose a size for the NAICS code you entered, you will not be able to save your input. Then answer the socio-economic questions below (if you stated you were small in one or more NAICS codes above, the Supplier Size will default to small). Select the certification button. his will save your information and completes the process. This certification is active for one year from the date that you certify. However, if anything changes, you are required to update the information with the new changes.
What happens if a supplier does not have the same procurement NAICS code in their Exostar profile that is identified on the PO?
If the NAICS code being used in the procurement is not in the supplier’s profile, the procurement will be counted as a large business commitment, even if the supplier is small. We must have a self-certified size of small in a supplier’s profile to count it as a small business commitment.
FAR 19.702 requires us to get a small business plan from suppliers who are considered large, when a procurement is over $700,000. Therefore, if the supplier does not have the procurement NAICS identified on the procurement in their Exostar profile, and is awarded the procurement, they will be considered a large business and therefore may be required to submit a small business plan.
What if the NAICS code specified for the PO is different than the NAICs code we would use for that PO?
Per the FAR, the contractor identifies the NAICS code to be used on the procurement. If you are bidding on the award, and more importantly, if you have won the award, this NAICS code should be entered into your profile, along with your self-certified size to that NAICS code. If you disagree with the NAICS code that is on the solicitation/award, you should address this with the buyer. There is logic in our systems that identifies the NAICS codes for our procurements.
What if our size standard has changed after we received a purchase order?
When a purchase order is released, the NAICS code and size to that NAICS remains the same for the life of the purchase. If, after your size standard has changed, you receive another purchase order your new size will be used.
Why am I not allowed to self-certify with a NAICS that begins with 42, 44 or 45?
SBA prohibits us from procuring or purchasing against NAICS codes beginning with 42, 44 or 45. The applicable manufacturing NAICS code shall be used to classify acquisitions for supplies. A Wholesale Trade or Retail Trade business concern submitting an offer or a quote on a supply acquisition is categorized as a nonmanufacturer and deemed small if it has 500 or fewer employees and meets the requirements of 13 CFR 121.406. Per SBA “When a company selects a manufacturer NAICS, it is declaring that it provides a manufactured product, not necessarily declaring that it is “THE MANUFACTURER.” The manufacturing codes are for manufacturers and non-manufacturers supplying products.”
The wholesale and retail NAICs are in the NAICS system for other uses, such as SBA loans. They are not for federal procurements.
Why isn't my NAICS code coming up when I browse?
The SBA reviews and updates NAICS codes and size standards approximately every five years. The current SBA size standard table was established in 2017, which changed some NAICS codes and size standards. Please visit the SBA Size Standards website to find your current NAICS code as it may have changed. You may also view the NAICS update process fact sheet for more information.
We are a raw material supplier (manufacture nothing) code 423510. Since, it appears that we will need to certify to your NAICS codes, how can we get a list of those?
Please check the U.S. Small Business AdministrationTable of small business size standards.
Our company manufactures custom products that do not fall clearly within any specific NAICS code. How do we find out how Lockheed Martin might classify our products?
You are responsible for identifying your NAICS code. The SBA website can help with this. When you receive a solicitation/RFI/RFQ from Lockheed, a NAICS code will be identified on it. If you feel that your company works in that NAICS code, and you reply to Lockheed Martin, please consider adding the NAICS identified to your Exostar profile.
What is the relationship between NAICS and the Small Business Administration's size standards?
NAICS categories do not distinguish between small and large business, or between for-profit and non-profit. The SBA developed size standards for each NAICS category. For more information visit the SBA size standards website. You may also contact SBA's Office of Size Standards via phone (202) 205-6618.
Are the NAICS codes on RFQs determined by looking at potential supplier's NAICS in their Exostar profile?
No, the code on the RFQ is determined by logic in our systems that identifies NAICS codes to the products/services we are procuring. However, to be counted as a small business supplier for that NAICS you must have the NAICS and size in Exostar.
Is this only for small businesses? If we are determined to be a large business, what is the effect of the change?
All suppliers are requested to enter their NAICS codes and certify to their size, into our system, whether they are considered small or large. If a small business does not have the NAICS code and certification that says they are small, they will be counted as large in our government reporting. For a contractor to count a supplier as small, they must certify to that.