PSC AC32

Overview

The Product and Service Code (PSC) system is a governmentwide taxonomy that classifies the goods, services, and research the U.S. federal government buys. Agencies apply PSCs in FPDS and related acquisition systems (including SAM.gov) to identify what was procured, which supports spending visibility, reporting, and analysis. The PSC Manual maintained by GSA provides the authoritative definitions and structure for these codes. ¹

PSC AC32 is defined as “National Defense R&D Services; Defense-related activities; Applied Research.” It sits within the National Defense R&D Services family and is selected when the principal purpose of the contract action is applied research supporting defense-related activities. AC32 is distinct from basic research (AC31) and experimental development (AC33), as well as from R&D administrative expenses (AC34) and R&D facilities and major equipment (AC35). ²

See also on G2X:

• G2X — PSC AC32 overview
• G2X — PSC AC31 (Defense-related activities; Basic Research)
• G2X — PSC AC33 (Defense-related activities; Experimental Development)

What this PSC covers

• Applied research services whose predominant purpose is to advance defense-related activities, coded under the National Defense R&D Services family. ²
• Efforts that follow basic research and attempt to determine and exploit the potential of scientific discoveries or technological improvements to advance the state of the art. ³
• R&D contract actions recorded in FPDS using PSC data element 8A when the work is for research and experimental development services. ²
• Activities that are research-focused rather than product purchases; items bought in support of R&D are coded with the appropriate product PSC, not an R&D PSC. ²
• Work that is not the design, development, or testing of specific items for sale; such efforts fall under “development,” generally associated with AC33. ³
• Administrative costs tied to defense-related R&D that should be classified under AC34, not AC32. ²
• Specific subdomains encompassed by “defense-related activities” are not detailed in the PSC Manual. Not specified by official sources ¹

Related NAICS and PSC codes

Coding boundaries and selection notes

• For defense-related R&D, select among AC31, AC32, and AC33 based on whether the predominant purpose is basic research, applied research, or experimental development. Use AC34 for administrative expenses and AC35 for R&D facilities and major equipment; do not assign R&D PSCs to routine product buys supporting research. ²

Applied research definition (FAR)

• Applied research is the effort that normally follows basic research; it seeks to determine and exploit the potential of scientific discoveries or technology improvements and to advance the state of the art. It excludes efforts whose principal aim is the design, development, or testing of specific items or services for sale, which are considered “development.” ³

Frequently asked questions

• What does PSC AC32 represent?

  • AC32 signifies National Defense R&D Services for defense-related activities in the applied research phase. It is chosen when the contract’s primary purpose is applied research rather than basic research, experimental development, administration, or facility/equipment acquisition. ²

• How does applied research (AC32) differ from experimental development (AC33)?

  • Applied research advances knowledge and assesses potential applications; development uses scientific and technical knowledge to design, develop, test, or evaluate potential new or improved products/services to meet specific performance objectives. Development activities align with AC33. ³

• When should AC32 be used relative to other defense R&D subcategories?

  • Use AC32 when the work supports defense-related activities and the principal purpose is applied research. The PSC Manual does not further define the scope of “defense-related activities.” Not specified by official sources ¹

• Does AC32 cover prototypes or system design/testing?

  • No. Efforts whose principal aim is the design, development, prototyping, or testing of specific items or services are “development,” which aligns with AC33. Applied research focuses on advancing knowledge and potential application, not producing specific items for sale. ³

• Are purchases of R&D equipment part of AC32?

  • No. R&D facilities and major equipment are captured under AC35. Routine supplies purchased in support of R&D should be coded with the appropriate product PSC, not an R&D PSC. ²

Useful resources

• G2X — PSC AC32
• Acquisition.gov — Product and Service Code Manual (document library). ¹
• Acquisition.gov — PSC Manual, April 2025 Edition (PDF). ²
• FAR 35.001 — Definitions (Applied research and development). ³

References

1. Acquisition.gov — Product and Service Code Manual (document library): https://www.acquisition.gov/psc-manual/all
2. Acquisition.gov — PSC Manual, April 2025 Edition (PDF): https://www.acquisition.gov/sites/default/files/manual/PSC%20Manual%20April%202025.pdf
3. FAR 35.001 — Definitions: https://www.acquisition.gov/far/35.001