GSA Sales Reporting and Industrial Funding Fee Fraud: The Sales Ledger Behind the Remittance

GSA Industrial Funding Fee fraud includes knowingly underreporting Schedule sales to avoid paying the fee owed to the General Services Administration. The government pays the fee in the purchase price. A contractor that hides the sale keeps money meant to fund the government’s purchasing program. If you know about unreported GSA Schedule sales and industrial funding fees, your whistleblower evidence may connect a transaction the business completed to money it kept out of GSA’s hands.

The purchase, the sales report and the fee remittance each leave their own records. A person who handles invoices may see the sale. A person preparing the report may see which transactions were left out. Delivery of the goods does not answer what happened to the fee.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What Is GSA TDR Reporting?

Transactional Data Reporting gives the government transaction details about goods and services sold under covered contracts. It replaces a quarterly sales summary with monthly transaction reporting, while Industrial Funding Fee remittance remains quarterly.

The General Services Administration rule that introduced TDR in 2016 describes information such as contract and order numbers, deliverables, quantities and prices. Those fields connect what the contractor sold to the agreement under which it sold it. Sending the monthly report and sending the money are separate obligations.

Which Modification Starts TDR Reporting?

The Participate in TDR modification starts reporting on the first day of the quarter after acceptance, according to GSA’s transition guidance. It is separate from the A909 modification. We connect each reporting period to the promise in force then.

The change removes the old Price Reductions Clause promise to track a negotiated customer’s pricing. Accurate sales reporting and fee payments remain.

When Does a Sale Belong in the Report?

The contractor’s consistent sales-recognition method determines when a transaction belongs in a report. Under the traditional clause, that point could be the order, delivery, invoice or payment. Transactional Data Reporting uses invoice issuance or payment receipt.

That distinction matters at the boundary between months. We compare the company’s accounting policy with the transactions selected for the report, including the sales left outside it. Knowing that method can make an insider’s apparently small discrepancy very specific: this sale belonged in this period, and the report omitted it.

How Is the GSA Industrial Funding Fee Calculated?

The GSA Industrial Funding Fee is calculated from reportable Schedule sales using the applicable contract rate. The general Multiple Award Schedule rate is 0.75% unless the solicitation specifies otherwise. Department of Veterans Affairs schedules have different listed rates, so the contract and schedule determine the rate for a particular sale.

The fee is included in the awarded price. The ordering customer pays it as part of the purchase, and the contractor remits it to the General Services Administration. It funds operation of the Schedule program and authorized related initiatives.

When a government invoice includes the Industrial Funding Fee but the sale is not reported, the customer charge and the GSA report tell different stories. The invoice shows the fee-inclusive charge. The sales report shows what the contractor told GSA. The remittance shows what it sent back. An omission from the sales total can reduce the fee calculation before anyone reaches the payment screen.

What Does a Zero-Sales Report Say?

A zero-sales report says there was no reportable contract activity for that period. Transactional Data Reporting requires that confirmation even in a month with no activity.

For an insider, the revealing comparison is between that zero and the invoices or payment receipts that meet the company’s reporting method. A system that leaves covered sales outside its reporting population can produce a zero even while the business is selling under the contract.

Reporting continues through physical completion of the last outstanding task or delivery order. Stopping new orders does not end the reporting story.

What Proof Do You Need as a Whistleblower?

For unreported Schedule sales, useful evidence connects the contract, the sale, the report, the remittance and the people who understood the difference. We work through those connections with you, starting with the records your role lets you explain.

The contract and modifications identify the reporting promise. Invoice and payment records identify the transactions that should meet it. Sales-report extracts show which transactions reached GSA. Remittance confirmations show the money sent. Together, they let us examine both an omitted sale and a fee left unpaid after the sale was reported.

The reporting system calculates a running fee balance as sales are reported. A remittance can match that balance while an underlying sale remains absent from the report. Paying the balance does not bring the missing sale back into view.

You may know how the accounting system selects sales, who prepares the report, or why a particular contract’s transactions were left out. That knowledge connects the figures to decisions inside the business.

GSA Auditors Checked the Sales-Tracking System

The General Services Administration’s inspector general described site visits checking whether contractors’ systems identified all Schedule sales and whether contractors correctly reported them. Its report for the period ending March 2001 said visits recovered fees from unreported sales. The review put the sales-tracking system, rather than just the final payment, under examination.

A later GSA audit account described a different fee problem at Covenant Security Services. The audit found that the company had not lowered its Schedule pricing as required by a contract modification reducing the Industrial Funding Fee. The fee can affect both what the customer pays and what the contractor sends to GSA.

CDW-Government Allegedly Left Sales Out to Avoid the Fee

CDW-Government agreed in March 2013 to a $5,663,902 settlement covering alleged sales underreporting, improper shipping charges and sales of products from countries prohibited by the Trade Agreements Act. The company resold information technology, equipment, services and office supplies.

The Justice Department alleged that the company underreported sales to avoid paying the Industrial Funding Fee. The contractor’s sales records and the sales reported to GSA become the comparison that matters.

A former sales representative brought the whistleblower case. The Justice Department announced that the whistleblower would receive nearly $1.6 million of the recovery. That role matters to the reader who knows the customers and orders but does not prepare the fee remittance. The person who knows a sale occurred can supply the connection that is missing from the report.

SAP Public Services Allegedly Failed to Account for Fees

SAP Public Services agreed in March 2021 to pay more than $2.2 million to resolve allegations involving unpaid GSA fees, contractual discounts and staffing. It sold software engineering and support under Schedule contracts.

The government alleged that SAP failed to account for the Industrial Funding Fee owed on several contracts. The same announcement described failures to provide required discounts and staffing that met educational or experience requirements. Fee accounting connects sales to remittances. The discount and staffing allegations concern different promises within the same contracts.

Customer Records Can Supply the Missing Comparison

A customer’s records can reveal information about a supplier that the supplier’s own disclosure leaves out. Whistleblowing Threat and Corporate Disclosure, a working paper discussed at accounting meetings in 2023, found that companies disclosed fewer customer identities after states adopted general False Claims Acts. The effect was stronger among firms with government customers.

The paper explains why information from outside the business can matter to someone inside it:

For the fee question, the comparison is the customer’s purchase against the seller’s reported Schedule sale. Someone who knows the transaction from the buying side may be able to explain a sale that disappeared on the selling side.

When You Know Which Sales Are Missing

If you handle Schedule sales, invoicing or fee reporting and know which transactions are missing, speak with our whistleblower experts about the sales GSA never saw. We work beside you to build your strongest GSA whistleblower case from the transactions, reporting decisions and unpaid fees, and bring in GSA fraud whistleblower lawyers who understand Schedule contracts. Bring us what you know about the sales the government paid for and the fees it never received.