Relevant information that enhances your GSA proposal experience.
What Is the IFF?
The IFF is a sometimes confusing topic
It is an important factor in keeping your GSA contract current
Many contractors don't do the IFF process because they simply forget they need to do it
IFF stands for Industrial Funding Fee. The IFF is a slight bump in your rates that you collect and then, four times each year, send to GSA. The IFF money that GSA collects from its contract-holders funds GSAAdvantage, the Website that will list your goods and services. Think of GSAAdvantage as Amazon, but only for government buyers.
Here’s how it works. Let’s say that your proposed rate (for anything, don’t worry about if it’s a good or a service) is $100.00 before you factor in the IFF. For most GSA schedules, the IFF factor (rate) is ¾ of one percent…or .0075. You don’t want to fund that out of your own pocket, of course, so you include the IFF factor into the rates that you propose to GSA.
To do that, you divide your proposed rate of $100.00 by .9925, and you get a proposed rate to GSA, with the IFF, of $100.76: $100.00 (your original proposed rate to GSA) + .76 (the IFF factor of ¾%) = $100.76, the final proposed rate to GSA with the IFF.
Let’s say that the rate of $100.76 is an hourly rate for a programmer and this rate ends up in your GSA contract and, by extension, on your listing at GSAAdvantage. Now, let’s say that you get a contract with some federal agency and the eventual contract includes 256 hours of that $100.76-per-hour labor category.
Great! This means that you will earn $25,794.56. But the ¾% IFF factor is included in that $25,794.56: $25,794.56 X .0075 = $193.46
Once the government agency that contracted with you pays you $25,794.56, you pull $193.46 out of that $25,794.56 and keep it in a special account.
Every one to three months, you give whatever is in that account to GSA. You’ve then paid the IFF to GSA. Of course, the money really came from the federal customer who paid you $25,794.56, right? Right! So, you didn’t really pay the IFF, your government customer with whom you’ve got your contract paid it. You just collected it and passed it along to GSA. And, that’s the IFF!
The Trade Agreements Act is a powerful factor in product sourcing
Never offer products that are not TAA-compliant
Sometimes the whole is greater than the sum of its parts
Visit any big-box retailer in the United States and it seems as if everything in the store were made in China. Clothes. Electronics. Toys. You name it and it probably came from China.
Thousands of businesses approach GSA every year wanting to offer their products through their GSA contracts. These businesses are shocked when they discover that GSA rejects their proposals when GSA discovers that those products came from China. What gives?
Congress established the Trade Agreement Act (TAA). The TAA mandates that the federal government may buy items only from countries that are TAA “compliant”, meaning that the government may buy items only from countries that comply with the TAA. Many countries do (Canada; most countries south of the US border and in the Caribbean; most countries in Europe; some in the Middle East, including Israel; some in Africa; some in and around Asia, including Japan, Taiwan and South Korea; Australia and New Zealand) comply with the TAA and there’s no problem with products from those countries. Countries that are on the restricted list include China, India, Brazil, Pakistan and Turkey because they have not signed the TAA.
At this point, you’re probably shaking your head and beginning to get more than a little annoyed. India, Brzil, Pakistan, Turkey and Taiwan are allies of the USA. We have embassies in those countries and they have embassies in Washington, DC. And, as we’ve pointed out, US commercial companies buy billions of dollars worth of Chinese products every year. And so does the federal government, when it feels like it.
This is hypocrisy, you say. Yep. The US government buys computers whose parts came from China, for example. How is that justified? The answer is “substantial transformation”.
Substantial transformation is the art and science of taking something in a particular state of being, altering its existence and turning it into something entirely different. Computer parts, for example. All the components that make up the typical PC on the typical government worker’s desk came from China and Thailand. Yes, but the company that sold the “system” to the government paid less than 50% of the list price of the item for the parts and assembled the parts into a system, thereby “substantially transforming” the parts into a new entity, a PC system, complete with a monitor. Sell those parts separately, a monitor, for example, and, in theory, the government is not supposed to buy those items.
What can you do? Well, there are ways to deal with this frustrating situation:
- Substantial transformation. Example: If you sell Chinese-made weights for use in a gym, package the weights in a box that also has a workout book (printed in a TAA compliant country), a workout DVD (pressed in a TAA compliant country) and a set of shower towels (woven in a TAA compliant country) and, bingo, you have a “getting into shape” system, only one of whose parts came from China and has a list price well over 50% of the cost of the Chinese weights.
Another example of substantial transformation: You have Item A, which, by itself, has no function (a locking mechanism) and Item B, which, by itself has no function (a security cable). Individually, these items have no function. But put them together (the locking mechanism and security cable) and you have a fully functioning item that has transformed from individual parts that, apart, can do nothing, to a laptop antitheft device to keep your laptop in place.
- Complain, long and loudly, to your elected officials in Washington, DC, and get others to complain, as well. As long as nobody’s making an issue out of it, Congress will be happy to let things stay the way they are.
- Move production to the western hemisphere. Too much trouble? Fine, don’t sell to the government. But, do some checking around and you’ll discover that making those same items in Mexico or some other TAA country closer to the USA costs the same as making them in China and costs just one-fourth as much to ship to you! You save money, in the long run. In the short run, yes, it’s a pain in the rear to make the transition. But if you want to sell your goods to the federal government, you’ll sure look into this. And, any money you might have to spend to make the transition will be paid for many times over by the sales you make to the government once you have your GSA contract.
So, that’s the story, briefly, regarding trying to sell items made in China, India, Brazil, Pakistan and Turkey to the federal government. There are ways to find a satisfactory solution for you and we at GSAProposal.com will work with you to do just that. We have, in fact, been able to do this successfully for many of our clients.
By the way, if someone who is in the proposal writing business tells you that there are no worries, that they can get around the TAA problem with administrative sleight-of-hand or that non-TAA compliant products are OK, ask them if they’ll pay the $100k+ per occurrence fine you’ll suffer if you get caught. Better yet, hang up the phone.
If you are in doubt about this process and have questions, don’t automatically give up or go elsewhere…give us a call first and we’ll talk with you about your products.
Note: As of July 15, 2009, products from Taiwan are now acceptable as Taiwan has become a party to the Agreement on Government Procurement (GPA).
A Shared Process
Building a GSA proposal is a collaboration
Someone who doesn't work in your company cannot build a GSA proposal without your input
Together, we are successful
One of the most-asked questions we get from prospective clients is who does what in the proposal process. The short answer is: you give us the information we need and we craft and refine the proposal to make it fully responsive to GSA’s requirements.
Creating a GSA proposal is a shared process. You know all about your company and we know how to create proposals acceptable to GSA. Therefore, neither of us can do this process successfully alone. And, there’s no such thing as a GSA proposal company that can build a proposal on its own, with absolutely no involvement on your part. If a company tells you that you won’t have to get involved at all, they are not telling you the complete story, nor are they really doing you any favors.
Indeed, you should not remove yourself completely from the proposal creation process. Your goal is to sell your goods and services to the federal government, a client whose rules and culture may be completely foreign to you. The time to begin learning about that culture and its rules is when you first begin working with us to create your proposal. That way, when you have your GSA contract and it’s time to begin selling to this new customer, you will be prepared to sell to it instead of just starting to try to understand it.
So, who does what? You hire us to prepare and format the proposal documentation, but we rely on you for the information that forms the core of the documentation. Here’s an overview of the process:
We ensure that you have the requisite qualifications for GSA to grant a schedule to you.
We answer your questions about the process and how we work with you.
We send you a welcome pack to get you started. If there are additional questions, we answer them fully.
Once you sign the agreement and make payment, we send you proposal documentation, described below.
We work the documentation until it’s completed. For the most part, you give us the information we require to create a proposal that is fully responsive to the RFP (request for proposal) issued by GSA. There is a lot of back-and-forth here, with the required fine-tuning and tweaking that we do for you.
A. The Admin section. Here, we send you a few files: you look for yellow highlight areas that we mark and complete them. This normally takes under an hour. There are also some Web-based requirements whose completion time varies.
B. The Technical section. For tech proposals, we give you a sample and guideline set and you write the first draft of the tech proposal. We do the serious editing that creates the kind of tech proposal that fully, but succinctly, discusses your experience and capabilities.
C. The Pricing section. For price proposals, we give you a sample and guideline set and, often, a spreadsheet sample. The sample is just that, a sample. Your information will be different and will have to be worked for the specific solicitation, but the sample will provide a guideline for what GSA expects. You work with all of that to create the preliminary data required and we work with you to fine-tune it. If you resell someone else’s finished products, we work with on getting commitment letters and country-of-origin documentation from your distributors.
When the proposal is ready, we assemble and send (upload) it to GSA.
Once the GSA PCO gets in touch with you to begin negotiations and fine-tune your proposal, we work with you throughout that process.
Once the GSA PCO is satisfied that we’ve taken care of all outstanding comments and issues, the PCO issues your GSA contract number.
At that point, we upload your contract data to GSA’s Web site, gsaadvantage.gov.
When the PCO is happy with the upload, you’re ready to market your GSA contract.
Let’s look at that critical fifth bullet point. This is where you need to understand your role and our role in the process.
Most GSA proposals have three sections: Administrative, Technical and Pricing. Let’s see who does what with each section:
The Administrative Section This section involves a few documents and a few Web sites. Where GSA requires input in the documents, we prepopulate the docs and highlight the input areas in yellow where the doc still needs content. Where you see yellow, you enter information.
The Technical Section This section is probably the most involved. This document describes your company and its capabilities, and includes descriptions of past work so that GSA feels comfortable that your company has the technical savvy to do sophisticated work under your own prime contracts once you have your GSA schedule. This is information that only you have, especially at the level of detail required by the RFP. We give you a technical proposal sample and you write a basic narrative that includes an Executive Summary (that gives an overview of your skills along with some information about quality control and financial responsibility) and several pages that describe your company’s past performance, focusing on the kind of work to which you are proposing. Your role is as preliminary author; you write the basic information. Our role is to refine, edit and rewrite the information so that it passes GSA muster. We need you for the information; you need us to edit and polish your narratives so they are acceptable to the GSA technical reviewers.
The Price Section This document requires pricing input, usually in the form of invoices you created from past sales and Excel spreadsheets which you build with our close assistance, using an Excel sample that we give to you. We work back and forth with you to create the price proposal. You give us the raw data and we refine this proposal volume and the spreadsheets that go with it. So, your role is to give us information and some documentation that only you have; our role is to refine it into a document acceptable to GSA. We need you for the information; you need us to create a document with which GSA will find favor.
Once GSA receives and reviews your proposal, they will contact you via e-mail with a list of additional requirements or explanations. As soon as you receive this communication, notify us by e-mail immediately and we will swing into action to help you answer GSA as quickly as possible. Be aware that this phase of the process can be frustrating. GSA has a habit of asking for information that’s already in the proposal or for additional information that the RFP did not request. Once GSA is happy, we complete a “final proposal revision” for you.
Once GSA awards your schedule number, we input information to GSAAdvantage, a process for which some of our competitors charge extra but is included in our fee. Once GSA okays what they see there, you’re off and running!
We hope this page helps you understand the shared nature of creating a successful proposal. We do the heavy lifting of compiling and refining information with the information that only you have and that you provide to us.
As always, if you have any questions about this, please write to firstname.lastname@example.org.
See Getting Ready for a quick list of what you need during the proposal building process.