Industrial Funding Fee (IFF)

The Industrial Funding Fee (IFF) is a fee paid by GSA Multiple Award Schedule contractors to the General Services Administration as a percentage of all sales made through their GSA Schedule contract, funding GSA's cost of operating and managing the Multiple Award Schedule program.

What is the Industrial Funding Fee?

The IFF is authorized under 40 U.S.C. 321 and is required of all GSA Schedule (MAS) contractors. The current IFF rate is 0.75% of all sales transacted through the GSA Schedule contract. This fee funds GSA's FAS operations, the staff, systems, and infrastructure required to solicit, negotiate, award, and manage thousands of Schedule contracts and provide the ordering tools (GSA Advantage!, GSA eBuy) that federal buyers use.

IFF mechanics:

Reporting: GSA Schedule contractors must report their quarterly sales to GSA through the FAS Sales Reporting Portal (SRP). Sales are reported by Special Item Number (SIN). The IFF is then calculated and remitted to GSA based on reported sales.

Quarterly remittance: After reporting quarterly sales, contractors remit the IFF payment (0.75% of reported sales) to GSA within 30 days of the quarter's end. Failure to report and remit IFF is a serious compliance violation that can result in Schedule contract cancellation.

What counts as IFF-reportable sales: All Schedule contract orders, task orders, purchase orders, BPA calls, and cooperative purchasing orders, are reportable. The IFF applies to the total invoice amount (including services, products, and any authorized travel or ODC separately billed under the Schedule).

Pricing inclusion: Most contractors incorporate the IFF into their quoted prices. If a contractor's cost to provide a service is $100 and their desired margin puts the price at $110, they would typically quote $110.83 (or round to $111) to cover the 0.75% IFF on top. Alternatively, the IFF can be listed as a separate line item on quotes, but this is less common.

GSA Schedule Audit: GSA's Inspector General audits Schedule contractor IFF compliance. Underreporting sales (to reduce IFF payments) is the most common violation found in audits. Audits review commercial invoices, Schedule orders, and financial records.

Why the IFF matters for government contractors

The IFF is a cost of doing business on GSA Schedule, it must be factored into pricing to protect margins. Contractors who forget to include IFF in pricing effectively reduce their margin by 0.75% on every Schedule sale. More critically, IFF reporting compliance is one of GSA's primary audit focuses: contractors with high Schedule volume who underreport sales to reduce IFF payments face audit findings, back payments with interest, and potentially debarment. Compliance best practice: automate IFF tracking by tagging all revenue from Schedule order numbers at the time of invoicing, generate quarterly IFF reports automatically, and verify the report before submission.

Example

A staffing company with a GSA Schedule for professional services generates $4.2M in Schedule sales in Q2. Sales are reported by SIN to GSA through the FAS SRP at the quarter's end. The IFF on $4.2M is $31,500 (0.75%). The contractor submits the quarterly report, receives a GSA invoice, and remits $31,500 within 30 days of quarter end. The company's finance team uses an automated tag in its accounting system that identifies all revenue from orders with GSA Schedule contract numbers, generating the quarterly IFF report directly from accounting data, reducing the compliance burden and audit risk of manual tracking.

Frequently Asked Questions

Is the IFF negotiable?

No. The IFF rate is set by GSA and is uniform for all MAS contractors (currently 0.75%). It is not negotiable and cannot be waived for individual contractors. Some contractors mistakenly treat it as negotiable during Schedule negotiations, it is not.

Does the IFF apply to cooperative purchasing orders placed by state/local governments?

Yes. Sales to state, local, and tribal governments through GSA Schedule cooperative purchasing are reportable and subject to the IFF at the same 0.75% rate. The IFF applies regardless of whether the buyer is a federal agency, a state government, or a local entity, if the order is placed against a GSA Schedule contract, the IFF applies.

What happens if a contractor fails to report or remit IFF?

Failure to report or remit IFF is a material breach of the Schedule contract terms. GSA can issue a cure notice and ultimately terminate the Schedule contract. Significant underreporting may also constitute a False Claims Act violation if it is willful. GSA audits specifically look for IFF compliance issues, comparing reported Schedule sales to independent data sources (FPDS, contractor invoices).

How does the IFF affect pricing decisions?

Contractors must build the IFF into their Schedule price list to avoid margin compression. When quoting below-schedule prices on task orders, contractors must ensure the discounted price still covers cost, margin, and IFF. Some contractors explicitly track their "effective margin after IFF" as a key metric. For contractors with multiple revenue streams (Schedule and non-Schedule), ensuring accurate revenue tagging is critical so IFF is only applied to Schedule sales, not all revenue.