From the GSA Trenches: Schedule Sales Reporting Issues
June 9, 2016
Contractors holding GSA Multiple Award Schedule (MAS) contracts are required to report quarterly all contract sales, and remit 0.75 percent of sales back to GSA as an Industrial Funding Fee (IFF). The 0.75 percent IFF is added on top of negotiated contract prices, so that the ordering customers actually pay the fee and the contractor passes them through. As explained in General Services Administration Acquisition Manual (GSAM) clause 552.238-74, Industrial Funding Fee and Sales Reporting, “The IFF reimburses [GSA’s Federal Acquisition Service] for the costs of operating the Federal Supply Schedules Program. FAS recoups its operating costs from ordering activities as set forth in 40 U.S.C. 321: Acquisition Services Fund.”
As we covered in our last blog in this series, “From the GSA Trenches: The `Trickle Down’ Audit,” since 2011, the GSA Office of Inspector General (OIG) has published an annual memorandum, “Major Issues from Multiple Award Schedule Preaward Audits.” The most current memorandum identified failure of sales tracking systems to capture and report all GSA sales as one of three primary compliance issues, along with the use of unqualified labor, and submission of Commercial Sales Practices (CSP) that are not current, accurate or complete.
Since the IFF funds GSA’s schedules program, it is a primary focus of GSA’s industrial operations analysts (IOAs) during annual and end of term contractor assessments. Before the assessment, the analyst typically asks for a list of all of a contractor’s customers for the time period covered, in order to identify any sales that may qualify as GSA contract sales, but were not reported as such. “GSA’s Suspension & Debarment Division (S&D) makes Determinations of Eligibility for entities to use GSA Sources of Supply. An organization’s eligibility to use GSA sources of supplies and services is determined according to GSA Order ADM 4800.2H, Eligibility to Use GSA Sources of Supply and Services.” IFF reporting and payment are addressed by MAS solicitation clause 552.238-74, Industrial Funding Fee and Sales Reporting Modifications (Federal Supply Schedule) (May 2014), which defines sales reportable for IFF purposes as “those resulting from sales of contract items to authorized users unless the purchase was conducted pursuant to a separate contracting authority such as a Governmentwide Acquisition Contract (GWAC); a separately awarded FAR Part 12, FAR Part 13, FAR Part 14, or FAR Part 15 procurement; or a non-FAR contract. Sales made to state and local governments under Cooperative Purchasing authority shall be counted as reportable sales for IFF purposes.”
So, for example, a sale could have been made to the South Atlantic Fishery Management Council. Since this entity is listed as an eligible GSA MAS buyer in GSA Order ADM 4800.2H, if the sale included GSA items, and the purchase was not conducted under a separate contracting authority, GSA would consider the items listed on the GSA contract and sold to that customer, as a reportable sale for purposes of the IFF, likely requiring a correction in reporting and payment to include that sale.
IFF reporting and payment are due within 30 days of the end of every government fiscal year quarter, so the reporting and payment deadlines are:
- GFY Q1: January 30
- GFY Q2: April 30
- GFY Q1: July 30
- GFY Q1: October 30
If a contractor waits until the 31st of a month to report, the reporting and any payment would be considered late. It is best to report and pay at least a few days ahead of the deadline, to avoid system delays due to reporting volume.
Contractors are required to report each quarter when due, even if sales are zero.
Sales reporting is to be broken out according to each awarded Special Item Number (SIN) in a GSA contract. For example, an IT contract may have an awarded SIN for hardware (SIN 132 8), and one for perpetual software licenses (SIN 132 33). A contractor’s IFF tracking and payment system must be able to separate out items sold by SIN, so that the sales can be allocated. In addition, SINs can be broken down further if sales to state and local governments are sold through cooperative purchasing. The SIN to report these sales would have a –STLOC suffix added to the SIN number as sales are reported online. GSA has issued instructions to report sales to local entities under its State and Local Disaster Purchasing program as well (SIN suffix –RC).
If sales are not reported to a particular SIN but were in fact made, GSA will require that the sales reporting be adjusted, and the payment adjusted if and as needed. GSA requires that MAS contract sales meet or exceed $25,000 in the first two years of contract performance, and meet or exceed that number annually afterwards. This requirement applies to the entire contract, but GSA may sometimes seek to cancel a SIN off of a contract, if annual sales less than $25,000 are reported for that SIN.
Another area commonly overlooked is that sales are not to be reported and paid on open market or other direct cost (ODC) items on a GSA contract order. Only the items approved on the GSA contract are to be reported and the IFF paid.
Clause 552.238-74, Industrial Funding Fee and Sales Reporting Modifications (Federal Supply Schedule) also provides that “the Contractor shall maintain a consistent accounting method of sales reporting, based on the Contractor’s established commercial accounting practice. The acceptable points at which sales may be reported include–
(i) Receipt of order;
(ii) Shipment or delivery, as applicable;
(iii) Issuance of an invoice; or
Sales must therefore be reported consistently, and not switch between points of sale recognition.
GSA publishes a FAQ for IFF reporting which contains guidance and references on how and where to report sales for the IFF. Sales are reported and any IFF paid, at https://72a.gsa.gov/ .
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