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Product and Service Code (PSC)

ACON 061

DAU GLOSSARY DEFINITION

Alternate Definition

Definition: Product and service code (PSC) is a four-digit code used by all federal government contracting activities for identifying and classifying the services and Supplies & Equipment (S&E) that are purchased under contract.

General Information

A PSC is a four-digit code that describes a product, service, or research and development (R&D) activity purchased by the federal government. The Product and Service Codes Manual maintained by the General Services Administration (GSA) lists all the existing product/service codes. The Product and Service Codes Manual provides codes to describe products, services, and research and development (R&D) purchased by the federal government. These codes indicate what the government bought for each contract action reported in the Federal Procurement Data System (FPDS). A contract may have multiple contract line items, each with its own PSC, but FPDS will only capture the predominant product or service to be acquired. PSCs allow procurement systems to link contracting and financial data.

The Defense Federal Acquisition Regulation Supplement Procedures, Guidance, and Information segment 204.7103 requires the use of PSCs on contract line items.  All purchase requests (PRs) for service contracts requirements must include a PSC at the contract line item level of detail. Once established in the PR, the PSCs are captured in the accounting system upon obligation of funds.

DoD organizes its spend (money spent) for services and S&E using a taxonomy that maps PSCs as set forth in the Federal Procurement Data System and the Product and Service Codes Manual to portfolio groups.

Concepts

Some important concepts to understand, is that in many cases a given contract, task order, or purchase order will include more than one product or service.  In such cases, the PSC selected for the overarching contract will be based on the predominant product or service that is being purchased (by dollar amount, not quantity). For example, a contract for $1000 of lumber and $500 of pipe would be coded under 5510, “Lumber & Related Wood Materials.” However, each line item will receive the Product or Service code that is most applicable to the individual deliverable line item. Selection of the most applicable PSC possible results in a better data element. The second concept to understand is there are many acquisitions that are “goods-like” services, for example a repair or refurbishment of goods. A “goods-like” service should be assigned a service PSC, but make sure to give the line item a delivery date and other applicable information normally required for a good. On the other hand, some things might be “service-like” goods, such as a software license. A “service-like” good should be assigned a product PSC, but make sure to give the line item a period of performance and other applicable information normally required for a service.

Portfolio Group Taxonomy

The DoD's portfolio group taxonomy consists of 16 portfolio groups (9 services, 7 S&E) and 70 portfolios (40 services, 30 S&E). See PGI 237.102-74, Taxonomy for the acquisition of services and supplies & equipment.

Use of this taxonomy by each Component promotes consistency across the DoD and facilitates better understanding of the aggregate DoD spend, the value of specific services and S&E being acquired, and similarities and dissimilarities in buying practices and behaviors. Most importantly, the taxonomy facilitates establishing baselines for measuring progress.

Taxonomy Attributes

The taxonomy method was developed and implemented because it consists of just a few categories (i.e., portfolio groups, portfolios, portfolio category, subcategory), yet is broadly defined in terms of people, equipment, and facilities, and encompasses all spending. It is defined by an overarching hierarchical classification of services and S&E being purchased and not by which acquisition method was used or which organization did the buying.

PSCs were selected because they are readily available, accurate, and consistently recorded, unlike other classification codes used by various contracting offices. Attributes of PSCs include:

  • Nature and type of services, supplies, and equipment
  • Manufacturing level (raw materials to a completed end item)
  • Intended use or application (air, land, sea, or space)
  • Environmental attributes (energy efficient, biobased product, environmentally preferable)

Government-wide Category Structure

PSCs are also used to map spend into the 10 Common Government Spend Categories and the 9 Defense-Centric Spend Categories providing DoD insight into spend in each category and facilitating Category Management (CM) within the department.  See the Product and Service Code Manual page to find a spreadsheet aligning PSCs with the Government-wide Category Structure (NOTE:  look for the category information starting at column K). 

A Product Service Code (PSC) prediction service was developed by researchers at the Naval Postgraduate School and the Air Force Installation Contracting Agency (renamed AF Installation Contracting Center). It is intended to improve efficiency and consistency in selecting Product and Service Codes.

Additional Resources

In 2014, the Deputy Chief Financial Officer (DCFO) and Director, Defense Procurement and Acquisition Policy (DPAP) published the final “Product Service Code – Object Class Code crosswalk” that established the many to one relationships between PSCs and OCCs, respectively. The PSC-OCC crosswalk, PSC selection training, and a PSC selection tool may be found on Defense Pricing and Contracting Procue to Pay (P2P) site under additional resources.
 

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