What is a NAICS code and why is it important to your DBE/MBE/WBE certification?

October 5, 2021
By Danielle Dietrich
Posted in Business Services, Women and Diverse-Owned Businesses

If your company is applying for Disadvantaged Business Enterprise (DBE), Women’s Business Enterprise (WBE) or Minority Business Enterprise (MBE) certification, you will need to provide your company’s NAICS code(s), also sometimes referred to as your primary industry classification.

NAICS stands for North American Industry Classification System and is a standard used by federal agencies to classify businesses. You can look up appropriate NAICS codes here: https://www.naics.com/search/.

For DBE certification, a company will only be certified under the NAICS codes where the disadvantaged owner(s) can show that they can control the firm. 49 C.F.R. §26.71(n).  For example, if the owner spent their entire career managing a retail store, then purchased a manufacturing company, they may have a difficult time showing that they have the knowledge and experience necessary to control a manufacturing company.  The company will only be certified in the NAICS codes where it can demonstrate the owner has that control and the company can perform that work, and those NAICS codes will appear on the certification certificate.

Similarly, applications for WBE and MBE certification must demonstrate the ability to control their business in the industries indicated by their NAICS codes.

If a business expands and wishes to become certified under additional NAICS codes, it must follow the process set forth by the certifying agency to demonstrate the ability to control the business in that area and perform that work.

Finally, if you are a WBE, you may want to see if becoming a Women Owned Small Business (WOSB) or Economically Disadvantaged Women Owned Small Business (EDWOSB). The federal program provide additional opportunities for businesses holding these certifications, and are specific to certain NAICS codes.

If your company needs advice regarding diversity certifications, please contact Danielle Dietrich at 412-227-0284 or ddietrich@smgglaw.com.