If you read my previous post about the North American Industrial Classification System or NAICS, you know these codes represent one of the tools used by government agencies to classify acquisitions and procurements for goods, services and solutions. I referenced ‘one of the tools‘ because there is another classification system in use that is frequently misunderstood by many companies, or worse, not known to them whatsoever. Unfortunately, lack of knowledge and a lack of understanding of these classification systems can cost your company time, money, situational awareness and visibility. Why? They are key in how Government agencies describe requirements, and how Industry describes offerings agencies might buy in support of requirements.
What is this other system? It’s Product and Service Codes, or PSCs used to ‘describe products, services and research and development (R&D) purchased by the federal government.’ They differ from NAICS Codes in that PSC Codes describe “WHAT” was bought for each contract action reported in the Federal Procurement Data System (FPDS),” whereas NAICS Codes describe “HOW” purchased products and services will be used. NAICS and PSC Codes look different, too. NAICS Codes are six position numeric values and PSC Codes are four position numeric or alphanumeric values.
When compared to NAICS Codes, PSC Codes are much more granular. NAICS Codes are segregated into industry sectors represented by the first two digits of a NAICS Code such as ‘54 – Professional Scientific and Technical Services.’ The current NAICS Code system consists of twenty industry sectors. Product and Service Codes start with three categories, R&D, Services and Products, that are then broken down into 102 classes indicated by the first one or two digits of a PSC Code. In a given fiscal year there are twice as many PSC Codes referenced as NAICS Codes. To that end more than 2500 PSC Codes were referenced in FY14 contract actions. This is due in part to the many different PSC Codes attributed to multiple NAICS Codes in a fiscal year. For example, under the NAICS Code 541519 – Other Computer Related Services, 343 PSC Codes were referenced in FY14 initial obligations valued at $6.2 billion.
Conversely, the PSC Code 7510 – Office Supplies was attributed to 295 NAICS Codes during FY14 on initial award actions valued at $230 million. What these two examples demonstrate is the need for industry to leverage both classification types in marketing and market research activities. You can find more information about Product and Service Codes in a manual maintained by the General Services Administration as well as a spreadsheet located on FPDS-NG that lists all of the current PSC Codes.
How PSC Codes are used
Agencies use PSC Codes during acquisitions and procurements to indicate the prevalent product and service to be purchased. You can find PSC Codes referenced on forecasts and pre-solicitation documents as shown below: As well as in executed purchases found in the Federal Procurement Data System as shown below:
From the standpoint of industry being visible, PSC Codes should be included in the System for Award Management (SAM) profile, and in the SBA Dynamic Small Business Search (DSBS) profile if you are a small business concern. Think of it this way. If an agency is conducting market research based on “WHAT” they intend to purchase and you don’t have PSC Codes listed, then you’re likely to be “seen” as often as this guy:
If we look at PSC Codes from the perspective of a company’s situational awareness, not including PSC Codes in your efforts to identify customers, competitors, spending trends, competition, contract and contract vehicle types used, etc. just means you have a limited view of the field of play, even within an agency you might already do business with.
Additionally, different parts of Government use PSC Codes in execution of statutory reports for tracking acquisition and procurement activity and trends.
Importance of PSC Codes to Government
If you’re not familiar with PSC Codes or don’t hear about them often, don’t let that fool you into thinking they’re not a factor now, or in the future. In 2012 the Department of Defense issued a memo describing how it uses ‘a taxonomy that maps Product Service Codes, as set forth in the Federal Procurement Data System Product and Service Codes Manual (referenced earlier) to support strategic sourcing and the Better Buying Power initiatives.’
They’ve gone as far as launching a web-based tool called the PSCTool that allows users (primarily DoD end-users and buyers) to find the right PSC using DoD’s taxonomy. It can also help vendors ensure they use PSC Codes aligned to the DoD way of thinking. I wonder if other agencies are tapping this or creating their own?
All of this is to support the Department’s effort to ‘foster communication and strategic decisions by providing significant insight into the marketplace and organizational spend behaviors to create cost savings, leverage economies of scale and draw attention to procurement best practices.’
Sounds important to me.
Guy Timberlake, @GovConGuy
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