NACE Code

A NACE code is a European standard classification code identifying the economic activity or industry sector of a business, used in procurement notices to specify the nature of the contract being advertised.

What NACE Codes Are

NACE (Nomenclature statistique des Activités économiques dans la Communauté Européenne) is the European Union's standard system for classifying economic activities. Each code identifies a specific industry or business activity, structured hierarchically: sections (single letters), divisions (two digits), groups (three digits), and classes (four digits). For example, Division 41 covers construction of buildings, while Class 41.20 specifies construction of residential and non-residential buildings.

The system is maintained by Eurostat and aligns with the UN's ISIC (International Standard Industrial Classification) framework, ensuring international compatibility.

Use in Public Procurement

In UK and EU procurement, NACE codes appear primarily in contract notices and Prior Information Notices (PINs) published on portals such as Find a Tender Service (FaTS) and, previously, the EU's TED (Tenders Electronic Daily). They allow buyers to categorise the subject matter of a contract by the supplier's economic activity, supplementing CPV (Common Procurement Vocabulary) codes, which describe what is being purchased rather than who supplies it.

Whilst CPV codes are the primary classification tool mandated under the UK's Procurement Act 2023 and previously under the Public Contracts Regulations 2015, NACE codes provide a secondary layer of classification useful for statistical analysis and market intelligence.

NACE vs CPV

| Feature | NACE Code | CPV Code | |---|---|---| | Classifies | Supplier's economic activity | The goods, services or works being procured | | Maintained by | Eurostat | European Commission | | Mandatory in notices | No (supplementary) | Yes | | Primary use | Statistics and market mapping | Contract notice classification |

Practical Relevance for Suppliers

Suppliers registering on procurement portals or completing pre-qualification questionnaires (PQQs) may be asked to provide their NACE code to confirm their sector. It is also used by spend analysts and policy teams to map public expenditure across industry sectors. Businesses should identify their correct NACE class to ensure their profile appears in relevant market searches conducted by contracting authorities.