Often times, you will see companies in the government contracting space that list a large array of NAICS codes under which they are qualified to perform services or sell products.
What are NAICS Codes? NAICS is the National Association of Industry Classification System for identifying via a numeric code what it is your company provides (goods and services) to its customers. Some examples of codes, of which there are hundreds, include 541511 for Custom Computer Programming Services and 541611 for Administrative Management and General Management Consulting Services.
The Small Business Administration imposes caps otherwise known as size standards based on the dollar threshold or number of employees a contractor may have to receive awards under a particular NAICS code and still be considered to be a small business. Therefore, an emerging government contractor - especially those with a small disadvantaged designation - will often advertise that they are able to perform services under literally dozens of NAICS codes, apart from their primary NAICS code.
We've seen first hand where an aerospace engineering company also had in its portfolio of services several NAICS codes in unrelated fields, including courier services. We refer to this shotgun strategy by the acronym AFAB*. As a result, the government agency that procures services cannot easily pinpoint the contractor's capabilities and offering in order to clearly identify the value
So what is it within a company's staff experience, past performance and background that uniquely qualifies a contractor with specific expertise (primary NAICS) to successfully perform contract work under such disparate codes? Often times, the answer is a resounding "nothing". When the expertise sought does not align with successful past performance in a particular field, this in turn could lead to a contract termination for convenience or - worse yet – termination for default.
Could a lack of specialization be holding you back in other ways?
The market research book, “Spiraling Up” is based on a compilation of results surveys conducted by Hinge Marketing of professional services firms. In it, the author’s observe, “High growth firms tend to specialize and are much more likely to have strong, easy-to-understand differentiators.” Therefore, a company that does not specialize is most likely to experience lackluster growth while attempting to be all things to all people.
Organic growth and contracting success is not met by offering services within a large mix of varied and unrelated NAICS codes, but rather within a fine tuned strategy of identifying your particular niche within a focused set of NAICS codes, including those closely related to your primary NAICS code. That way, your government customer can better understand your unique selling proposition that you provide, and exactly what it is about your company that sets you apart from your competitors.
* Anything For A Buck