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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: December 27, 2002

SUBJECT: Office of Management and Budget; North American Industry Classification System -- Updates for 2007

SOURCE: Federal Register, December 27, 2002, Vol. 67, No. 249, page 79499

AGENCIES: Office of Management and Budget (OMB)

ACTION: Request for Comments

SYNOPSIS: OMB, through its Economic Classification Policy Committee (ECPC), is soliciting comments on several questions related to a potential revision of the North American Industry Classification System (NAICS) for 2007.

EDITOR'S NOTE: NAICS is a system devised by the United States, Canada, and Mexico for classifying establishments by type of economic activity. Its purposes are: (1) to facilitate the collection, tabulation, presentation, and analysis of data relating to establishments, and (2) to promote uniformity and comparability in the presentation and analysis of statistical data describing the economy. The NAICS was first published in 1997, and it replaced the Standard Industrial Classification (SIC), which was originally developed in the 1930s.

The NAICS uses a 6-digit hierarchical structure to classify establishments, as follows:

SectorFirst two digitsSector 21 -- Mining
SubsectorFirst three digitsSubsector 212, Mining (except Oil and Gas)
Industry GroupFirst four digitsIndustry Group 2122 -- Metal Ore Mining
NAICS IndustryFirst five digitsNAICS Industry 21223 -- Copper, Nickel, Lead, and Zinc (in general, this is the lowest level of compatibility among the three countries)
National IndustryAll six digitsU.S. Industry 212231 -- Lead Ore and Nickel Ore (the sixth digit provides the necessary detail for national economic statistics, and reflects the fact that the economies of the three countries are structured very differently)

In 2002, NAICS was revised to improve comparability in the construction sector for the three countries and changes were made to identify Internet service providers, web search portals, Internet auctions, and other activities not adequately addressed in NAICS 1997 (for more on NAICS 2002, see the April 20, 2000, FEDERAL CONTRACTS DISPATCH "Office of Management and Budget; North American Industry Classification System -- Update for 2002," and the January 16, 2001, FEDERAL CONTRACTS DISPATCH "Office of Management and Budget; North American Industry Classification System -- Revision for 2002").

The Bureau of the Census maintains a NAICS information site at http://www.census.gov/naics. It contains previous NAICS Federal Register notices, ECPC Issues Papers, ECPC Reports, the current structure of NAICS United States 2002, and related documents.

DATES: Submit comments on Parts I through IV no later than January 27, 2003, and on Part V no later than March 28, 2003. Respondents are encouraged to send both a hard copy and a second copy via fax or e-mail.

ADDRESSES: Address comments and proposals to John Murphy, Chair, Economic Classification Policy Committee, Bureau of the Census, Room 2641-3, Washington, DC 20233-6500. It is suggested that written submissions be provided by e-mail to John.Burns.Murphy@census.gov or fax at 301-457-1343.

FOR FURTHER INFORMATION CONTACT: John Murphy, Chair, Economic Classification Policy Committee, Bureau of the Census, Room 2641-3, Washington, DC 20233-6500; 301-763-5172; fax: 301-457-1343; or e-mail: John.Burns.Murphy@census.gov.

SUPPLEMENTAL INFORMATION: The ECPC is soliciting commentS on five general topics pertaining to possible changes to the NAICS for 2007. These are presented in Parts I through V of the notice:

Part I, Background of NAICS 2002: The ECPC is soliciting comments on the priority and weight that should be assigned to each of the four principles of NAICS:

  1. Apply the production-oriented conceptual framework;
  2. Recognize new and emerging industries;
  3. Maintain time series continuity to the extent possible; and
  4. Strive for international comparability.

Part II, Increasing the North American Comparability of NAICS: The following NAICS sectors are currently comparable only at the sector (two-digit) level: utilities, wholesale trade; retail trade; and public administration. Other areas where comparability is somewhere between the sector level and the NAICS industry (five-digit) level are: finance and insurance; real estate; waste management and remediation services; as well as other services including personal and laundry services, and religious, grantmaking, civic, professional and similar organizations. Separate agreements providing for detailed industry comparability between Canada and the United States were reached for the utilities, retail trade, and finance and insurance sectors. To distinguish the three countries' versions of NAICS, they are called NAICS Canada, NAICS Mexico (SCIAN Mexico, in Spanish), and NAICS United States.

The ECPC recognizes the need for increasing the comparability of the NAICS structures being used in the three countries. For this reason, the ECPC is soliciting comments on the advisability of work to complete those areas of NAICS where comparability is currently at the two-digit (sector) level only. Because of resource constraints, the ECPC does not plan to increase North American comparability at this time, but the ECPC is soliciting public comment on this position.

Part III, New and Emerging Industries: NAICS was developed to be a dynamic industry classification, so every five years the classification is reviewed to determine the need to identify new and emerging industries. The ECPC has not identified specific changes that are needed. The ECPC is soliciting comments on the advisability of revising NAICS for new and emerging industries in 2007 and soliciting proposals for these new industries.

Part IV, Comparability With the Industry Classifications Used in Europe and the United Nations: As mentioned in Part I, one of the principles of the NAICS is international comparability. This includes the International Standard Industrial Classification (ISIC) of the United Nations, and its derivative, the Statistical Classification of Economic Activities in the European Community (NACE). Over the past two years, an international working group with representatives from Eurostat, Mexico's Instituto Nacional de Estadistica, Geografia e Informatica (INEGI), Statistics Canada, the United Nations, and the United States has studied ISIC, NACE, and NAICS. This group has identified the current classification systems' similarities and differences, beginning with underlying concepts and continuing to the detailed levels. The current phase of the study calls for public input on the advisability of modifying industrial classifications to foster greater international comparability.

Improved international comparability for NAICS can be attained using several different approaches:

The ECPC is soliciting public comment on several issues related to comparability of international statistical data:

  1. The need for greater comparability of international data;

  2. The preferred approach for improving comparability -- concordance, limited changes in NAICS, or a new common classification system;

  3. The advisability of making changes to NAICS to obtain greater comparability with NACE and ISIC and the relative amount of change that would be supported to align with a new international standard based on the principles of NAICS; and

  4. The usefulness of the scenario discussed in Appendix I.

Part V, Proposals To Identify New and Emerging Industries for NAICS 2007: The ECPC is soliciting proposals for changes to NAICS United States to account for new and emerging industries. Proposals will be collected, reviewed, and analyzed. As necessary, proposals for change will be negotiated with our partners in Canada and Mexico. The ECPC is soliciting proposals for specific new and emerging industries for consideration during a potential revision to NAICS for 2007 that conform to the NAICS principles outlined in Part I.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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