The General Services Administration (GSA) plays a crucial role in facilitating a significant portion of government spending. It acts as a mediator between government agencies and suppliers to provide products and services ranging from office supplies used at the Department of State, to Information Technology (IT) services at the Department of Labor. This simplifies the acquisition process for government agencies and saves them a lot of administrative work. However, you may be surprised to know GSA does not rely on your tax dollars to stay operational.
GSA is one of the only self-funded agencies in the U.S. government. It’s self-sufficient because it utilizes the Industrial Funding Fee, or IFF, to generate funds to keep it operational. Let’s discuss what the IFF is, how to pay it, and why it’s an important part of the GSA Multiple Award Schedule (MAS) program.
What is the Industrial Funding Fee (IFF)?
The Industrial Funding Fee (IFF) is a fixed percentage of reported sales under GSA Schedule contracts that is paid quarterly or monthly by GSA contractors. Unlike most government agencies, the GSA is self-funded. This is why when there is a government shutdown, GSA is still operating when other agencies may be fully shutdown.
Think of GSA as a Wholesale Club, like Costco: You need a membership to get in the store and your membership gives you priority access to a whole new set of opportunities. Your “membership card” in this situation is your GSA Schedule contract, and the IFF is the fee for the membership card. Yes, you have to pay a fee, but you have access to a whole new marketplace.
How and When Do I Make the Industrial Funding Fee Payment?
For all contractors under Commercial Sales Practices (CSP), you must report your GSA sales quarterly through the Federal Acquisition Service (FAS) Sales Reporting Portal (SRP). Your IFF is always due on the same day sales reports are due which is 30 days after every quarter ends. These specific due dates include: January 30, April 30, July 30, and October 30.
For contracts subject to Transactional Data Reporting (TDR), all sales reports for products and services are due at the end of every month. The IFF must be paid at least quarterly, but contractors can choose to remit their IFF on a monthly basis when they report their TDR sales. TDR may seem like a headache since there is more reporting involved. However, TDR eliminates big compliance headaches for contractors as it eliminates the Price Reduction Clause and other commercial sales requirements. If your company is looking to acquire a GSA Schedule Contract, be sure to check on the list of TDR eligible SINs if your company wants to opt into TDR.
The IFF can be paid through the Sales Reporting Portal (SRP). It’s important that you only report sales for products or services on your awarded GSA pricelist to avoid overpayment of the IFF and ensure accuracy. Contractors can only send the IFF payment after sales have been reported.
Calculating the Industrial Funding Fee
The Industrial Funding Fee is calculated into your GSA Schedule pricing. When going through the GSA Schedule acquisition process, you calculate your GSA price with and without the IFF payment for the Contracting Officer (CO).
You can calculate this price by dividing your GSA discounted price by 0.9925 to calculate your GSA discount price with IFF. What you pay back to GSA is 0.75% of GSA contract sales.
The IFF payment comes from GSA Schedule contractors to allow the agency to continue doing its work for other governmental agencies. GSA reduces the bureaucratic load for the rest of the U.S. government and doesn’t directly cost the U.S. taxpayer any money.
The primary objective of the fee is to offset the costs of the GSA's administration and management of the MAS program, which includes the development and maintenance of the program, the negotiation of the MAS contracts, as well as other administrative expenses. It is important to note that the IFF is not intended to generate revenue or make a profit for the government.
Will GSA Accept Payments of Paper Checks Anymore?
In the past, GSA allowed payment of the Industrial Funding Fee using paper checks. However, with the ongoing efforts to modernize and digitize, sending checks is no longer an option. Now, all payments for the Sales Reporting Portal (SRP) must be made electronically, using pay.gov. You can also provide your checking information through this method. Please also note that paper checks will not be accepted anymore. To avoid any delays in the payment process, kindly remind your accounting department about this new payment method and ensure that your IFF payment is submitted on time.
Are You Prepared for Upcoming Industrial Funding Fee Payments?
As October 30th is approaching, it's important to prepare for your next IFF payment. If you're a MAS contractor, you should be getting ready to report your fourth quarter/monthly sales and make the necessary IFF payment to remain in compliance with your GSA contract. Consistently making quarterly or monthly IFF payments is just one part of GSA contract compliance. To ensure your firm isn't overpaying or underpaying this required fee, it's recommended to consult with MAS contracting professionals.
If you need help with submitting sales reports or have any questions about IFF, our consultants are available and happy to assist you!
