By: Haley Lawrie on September 28th, 2020
What is the Industrial Funding Fee?
GSA Schedule | 4 Min Read
The General Services Administration (GSA) is the great facilitator behind a large margin of government spending. GSA is how the government gets its products and services—from pens used at the Department of State to Information Technology (IT) services at the Department of Labor, GSA makes government acquisition much easier for government agencies and saves those agencies a great deal of bureaucratic work. But how does the GSA stay afloat? Surprisingly, not by using your tax dollars.
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. At Winvale, we know it’s crucial to understand the IFF to maintain contract compliance, so we’ll walk you through everything you need to know about the fee from its purpose to payment.
What is the Industrial Funding Fee?
The Industrial Funding Fee is a fee to cover GSA’s cost of operating the Federal Supply Schedules (FSS) program. This fee is a fixed percentage of reported sales under GSA Schedule contracts that is paid quarterly or monthly by GSA Schedule contractors. The IFF is included in the price government agencies pay the contractor when they purchase items from a Multiple Award Schedule (MAS) contract. Since a MAS contract is a contracting vehicle, the IFF is essentially a “kickback” for GSA since you are using them for government acquisition services.
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 than you did without the GSA contract.
Where Does the Industrial Funding Fee Come From?
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. Any GSA contract sale requires the remittance of the IFF payment. If you need a refresher on what is and what is not a GSA contract sale, you can visit the Vendor Support Center webpage that breaks down the difference.
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.
How and When Do I Make the Industrial Funding Fee Payment?
For contractors offering products and/or services to the government through GSA’s MAS program, keeping up with IFF payments is a critical component of GSA contract compliance and contract maintenance.
The IFF must be paid quarterly or monthly, depending on the terms and conditions of your GSA Schedule contract. Quarterly IFF reporting and payments are due by the 30th day of January, April, July, and October. These reporting dates are 30 days after the end of each calendar quarter: January 1–March 31, April 1–June 30, July 1–September 30, and October 1–December 31. Contractors still need to report sales for each quarter even if no sales occur by entering “zero” (0) in the sales report.
Contractors may choose to remit IFF on a monthly basis when they report their sales and must do so through the Federal Acquisition Service (FAS) Sales Reporting Portal (SRP) system. The FAS SRP provides a safe, secure and user friendly portal for you as a GSA contractor to report your GSA sales. It is 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.
Failure to remit the full amount of the IFF within 30 calendar days after the end of the applicable reporting period constitutes a contract debt to the U.S. government under the terms of Federal Acquisition Regulation (FAR) Subpart 32.6. The FAR is essentially the federal government’s rulebook to acquisition, so it must be followed by GSA contractors. Keeping consistent records of your GSA sales and invoices will help make paying the IFF for your contract much simpler in the long run.
Can I Pay the Industrial Funding Fee by Sending a Check?
In the past, GSA used to allow paper checks to pay the Industrial Funding Fee. However, as GSA strives to become more digital, sending checks has been discontinued. Currently, all payments through the Federal Acquisition Service (FAS) Sales Reporting Portal (SRP) must be electronic using pay.gov. You can also submit your checking information with this method. No paper checks will be accepted. Make sure your accounting department is reminded of this payment method so you get your IFF payment submitted on time.
Are You Ready for the Next Industrial Funding Fee Payment?
With October 30th coming up quickly, your next IFF payment is approaching. MAS contractors should be preparing to report their fourth quarter sales and make the necessary IFF payment to remain in compliance with their GSA contract. Making consistent quarterly or monthly IFF payments is only one factor in GSA contract compliance. To learn more about IFF compliance, you may want to consult with MAS contracting professionals and verify that your firm is not overpaying or underpaying this required fee. Don’t let a small percentage cause you big problems down the line. If you have any questions about the IFF, or need assistance with contract compliance, reach out to one of our consultants.