Understanding the GSA Industrial Funding Fee: What Every Contractor Needs to Know

The Industrial Funding Fee (IFF) is a fee collected by the General Services Administration (GSA) from contractors who hold GSA Schedule contracts. This fee is currently set at 0.75% of the total sales reported on a quarterly basis. In simple terms, for every $100,000 in sales you make through your GSA contract, you owe $750 as an IFF.

The IFF serves a specific purpose in the GSA ecosystem. Unlike many government agencies that receive direct congressional appropriations to fund their operations, the GSA Schedules program is designed to be self-sustaining. The fees collected through the IFF fund the administration and operation of the GSA Schedules program, including:

• Contract administration
• Technical support
• Development of acquisition tools
• Marketing of GSA programs
• Training for both government buyers and industry partners

This funding mechanism allows GSA to operate its acquisition programs without relying heavily on taxpayer dollars, making it a more efficient government operation.

How is the GSA IFF Calculated?

Calculating the IFF might seem simple – multiply your sales by 0.75% – but the devil is in the details. You need to:

• Track all sales made under your GSA Schedule contract during each quarter
• Multiply the total sales amount by 0.75% (or 0.0075)
• The resulting figure is your IFF payment due

Consider a scenario where your company provides both products and services through your Schedule contract. You’ve invoiced a federal agency $100,000 for IT hardware, $50,000 for software licenses, and $75,000 for implementation services. You’ve also billed $5,000 for shipping and included $12,000 in state taxes (in a situation where the federal agency isn’t tax-exempt).

Your IFF calculation would look like this:

• Hardware: $100,000
• Software: $50,000
• Services: $75,000
• Subtotal: $225,000
• IFF calculation: $225,000 × 0.0075 = $1,687.50

Notice that the shipping charges and state taxes aren’t included in the calculation. This distinction matters because incorrectly including or excluding certain elements can lead to compliance issues down the road.

It’s important to note that the IFF applies to the total invoiced amount, including:

• The base price of products or services
• Any additional fees charged to the customer
• Applicable surcharges

However, the IFF does not apply to:

• State or local taxes that are separately listed on the invoice
• Shipping charges (if separately priced)
• Industrial funding fees themselves (the fee is not compounded)

The timing of when to recognize sales for IFF purposes can also be confusing. Generally, sales are reported when you’ve invoiced the government customer, not when you receive payment. This means you may sometimes need to remit the IFF before you’ve actually received payment from the agency.

Why is the GSA IFF Important?

The significance of the IFF extends far beyond its modest percentage:

• Contractual Obligation: Payment of the IFF is a contractual requirement. Failure to report sales and remit the IFF can result in contract cancellation, negative performance ratings, or even suspension from government contracting.

• Pricing Transparency: The IFF must be included in your GSA contract pricing. This means the prices listed on your GSA Schedule already incorporate this fee, ensuring transparency for government buyers.

• Business Planning: Knowing that 0.75% of your GSA sales will go toward the IFF allows you to properly account for this expense in your business planning and profit calculations.

• Compliance Indicator: How well you manage your IFF payments is often seen as an indicator of your overall compliance capabilities. Government contracting officers take note of contractors who consistently meet their IFF obligations.

Who Pays the GSA IFF?

While government agencies are the end customers who ultimately fund the IFF through their purchases, the responsibility for collecting, reporting, and remitting the IFF falls squarely on the GSA Schedule contractor.

Here’s how the process typically works:

• Incorporation into Pricing: As a GSA Schedule contractor, you include the 0.75% IFF in your GSA pricing.

• Quarterly Reporting: Every quarter, you must report your GSA Schedule sales through the FAS Sales Reporting Portal (SRP).

• Remittance: After reporting your sales, you must remit the corresponding IFF payment. This can be done electronically through the SRP portal.

• Deadlines: Reports and payments are due within 30 calendar days after the end of each quarter:

• Quarter 1 (Oct-Dec): Due January 30
• Quarter 2 (Jan-Mar): Due April 30
• Quarter 3 (Apr-Jun): Due July 30
• Quarter 4 (Jul-Sep): Due October 30

Even if you have no sales in a particular quarter, you must still file a “zero sales” report to maintain compliance with your GSA Schedule contract terms.

Need Help? Road Map Consulting Services

Navigating GSA IFF requirements can be challenging, particularly for new Schedule holders or companies with complex sales structures. Road Map Consulting specializes in helping contractors manage these requirements effectively.

Our services provide: