When contractors reach out, a common question we hear from those who are considering getting a new GSA Schedule is:
“Are there any hidden costs or fee’s that come with owning a GSA Schedule? “
While we always recommend contractors prepare an internal structure and process to grow and track GSA Schedule sales as well as consider the costs of managing a GSA Schedule to remain compliant. There is a fee that all GSA Schedule holders need to know about– The IFF. To understand the IFF you need to know how The General Service Administration (GSA) works.
The GSA is one of the few self-funding U.S. government agencies. They are responsible for the delivery of goods and services to all sectors of government with the help of proprietary electronic commerce, procurement, and vendor education websites. In addition, GSA manages the entire federal motor vehicle fleet. So where do they receive the funding to keep these systems running? The answer is the Industrial Funding Fee (IFF), and every one of the 9,000+ active contractors on GSA are instrumental in collecting these funds.
What Is The Industrial Funding Fee?
For new and existing contractors GSA adds the IFF to the final negotiated price. This allows them to collect revenue with every item sold through the GSA contract. The current IFF is 0.75% added after your GSA discount (GSA Price / .9925). It is critical that you are charging government customers the awarded GSA with IFF pricing included.
In 2021, the collective revenue of GSA contractors utilizing MAS contracts was almost $39 billion, resulting in an IFF accrual of $293 million.
When is IFF Collected and How Do I Pay It?
Collecting and paying the IFF is essential to stay in compliance and keep your contract with GSA. GSA requires the quarterly (monthly for TDR) reporting of your GSA sales on the Sales Reporting Portal (SRP). From those sales, the IFF is calculated for you to pay right away. Through the SRP system, payment can be made with a credit card, Paypal account, or an ACH Online Check.
If you are reporting zero dollars in revenue for the quarter, there will be no fee. Similarly, expect to pay a higher amount the larger your revenue.
The deadline for completing each payment is the 30th day into the reporting period. For example, the reporting period for sales occurring within January through March will be in April. IFF payment will be due on the 30th of April.
What Should Be Included In My GSA Schedule Sales Report?
“Open-market” items can also be added to a GSA order, however these are not considered part of the contract. Therefore, “Open-Market” items are not to be included in sales reporting. For all GSA items, it should be stressed that pricing include GSA’s added IFF.
What if I Miss an IFF Payment?
GSA keeps track and knows if you miss a payment. The consequences of missing an IFF payment is that the contract will be considered out of compliance with its contract terms. You will continue to receive notifications from GSA until the payment is made. Long-term or continuous failure to pay the IFF may result in losing your contract entirely. As the sole-source of funding, GSA takes this action very seriously. Contractors with Coley services will receive periodic reminders before it is due to ensure you don’t miss a payment.
Coley has over 20 years’ experience helping thousands of companies obtain and manage their GSA Schedule. As part of our compliance support, we assist many companies with their periodic sales reporting and IFF payments. We believe that your compliance with your GSA Schedule contract terms and GSA’s solicitation can be left to us so you can focus on growing your business. Contact us today at firstname.lastname@example.org, call directly at 210-402-6766 or schedule a call to receive assistance on managing your GSA contract or to get started on obtaining a new GSA Schedule.
Consultant with Coley GCS, LLC, a Government Contracts Consulting, Coaching and Training company. John has more than five years’ experience and is an expert on GSA Schedule product and catalog management, data analysis, & process and system support.