I've just researched the subject and there is no requirement that prohibits codes as they pertain to local operations. The requirements kick in when you have an incident that involves agencies from different departments or jurisdictions. "Unified Command" or "Area Command" Then it is a mandate to use "common terminology
From a NIMS Alert dated Dec. 19, 2006: (Link http://www.fema.gov/pdf/emergency/nims/plain_lang.pdf
While the NIMS Integration Center does not require plain language for internal operations, it strongly encourages it, as it is important to practice everyday terminology and procedures that will need to be used in emergency incidents and disasters. NIMS implementation is a long-term effort and it is probably not possible to persuade everyone to change ingrained habits overnight. But we do hope that over time, everyone will understand the important of using common terminology, that is, plain language, every day.
It is required that plain language be used for multi-agency, multi-jurisdiction and multi-discipline events, such as major disasters and exercises. Beginning FY 2006, federal preparedness grant funding is contingent on the use of plain language in incidents requiring assistance from responders from other agencies, jurisdictions, and functional disciplines.
The FY 2006 NIMS Implementation requirement to use plain language does not abolish the use of 10-codes in everyday department communications. Accordingly, the use of 10-codes in daily operations will not result in the loss of federal preparedness funds.
This alert replaces the one on 10-Codes issued on February 8, 2006.
Here is some other info from FEMA for guidance:
Interoperability & Compatibility: A principle of the NIMS that holds that systems must be able to work together and should not interfere with one another if the multiple jurisdictions, organizations, and functions that come together under the NIMS are to be effective in domestic incident management. Interoperability and compatibility are achieved through the use of such tools as common communications and data standards, digital data formats, equipment standards, and design standards. (Department of Homeland Security, National Incident Management System (March 2004), 55.)
Standardized Terminology: Commonly accepted language that is consistent with policies, plans, or procedures in the NIMS and NRP to facilitate multi-agency, multi-disciplinary or multi-jurisdictional communications during an incident.
is also a great source of info on interop communications.
If anyone is aware of newer and/or better information, please make it known to the rest of us. Thanks!