Visual representation of why 8(a) firms prioritize NAICS codes for market identification and federal contracting.

Most small businesses operating in the federal marketplace list just 3 to 5 NAICS codes—a tight cluster that reflects their core capabilities. But 8(a) firms? That’s a completely different story. The average 8(a) participant lists 16.7 NAICS codes, and the number keeps growing. New entrants typically start with around 15 codes, and by the time they graduate from the 8(a) program, that number rises to 23.

So, what’s driving this dramatic expansion? Are these firms truly branching into dozens of new industries? Or is something else going on?

To understand the behavior, you must look at the rules governing eligibility and contracting, especially around subcontracting and how firms are classified as manufacturers.

Why So Many NAICS Codes? A Strategic Necessity

When applying to the 8(a) program, a firm cannot be classified as a “broker” or “dealer.” The SBA wants to admit companies that make or do something—not just resell or pass through work. However, once a firm is in the program, the rules change. The firm can engage in more flexible strategies, including subcontracting and product distribution, provided they follow certain limitations.

Subcontracting: The 8(a) Performance Thresholds

Citation: 13 CFR § 125.6

The SBA limits how much of the contract’s value can be subcontracted to other firms. Here’s how the limitations on subcontracting break down:

Contract Type Minimum Work by 8(a) Firm
Services ≥ 50% (excluding materials)
Supplies / Products ≥ 50% of manufacturing cost (excluding materials) or comply with the Nonmanufacturer Rule
General Construction ≥ 15%
Specialty Trade ≥ 25%

These rules push firms 8(a) to hold onto the bulk of the work, but they also push firms to align themselves with multiple NAICS codes to stay eligible across various contracting opportunities.

Also read our article: Federal Sales Consultant Insights and Winning Strategies for Government Sales

The Manufacturer or the Middleman?

When it comes to manufacturing, 8(a) firms face a fork in the road:

Option A: Be the Manufacturer

  • Perform primary manufacturing operations
  • Operate your own facilities
  • Maintain control of production

Option B: Use the Nonmanufacturer Rule (NMR)

You can still sell manufactured products you didn’t make—if you:

  • Normally they sell those products (retail or wholesale)
  • Take ownership and risk of loss
  • Supply products made by a U.S. small business
  • Stay under the $250,000 contract cap (unless there’s an SBA class waiver)

The SBA also issues class waivers for specific product categories where no small business manufacturers exist—opening a door for 8(a) resellers under certain NAICS codes.

The Numbers Tell the Story

Of the roughly 400 8(a) firms involved in manufacturing, those firms collectively list over 8,500 NAICS codes—an average of 21 codes per firm, just in manufacturing. This doesn’t include the other service or construction NAICS codes these firms may also list.

Meanwhile, the federal government purchases around $1.4 billion annually in manufactured goods from 8(a) participants. That’s roughly $3.4 million per firm—a strong incentive to play in multiple categories.

Bottom Line: Strategic Diversification

8(a) firms aren’t just listing extra NAICS codes for fun—they’re responding to the rules and incentives of the system. By expanding their NAICS portfolio, they create more pathways to eligibility, especially in markets where compliance with subcontracting and manufacturing rules is complex.

In a competitive federal market, opportunity often lies in the margins. Successful 8(a) firms are uncovering revenue in unexpected places they never imagined when they first entered the program. Those that leave no NAICS code unexplored are the ones making the most of their nine-year window.

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