Federal Industrial Extension Act of 1987 - Establishes an Office of Extension Services within the National Bureau of Standards to inform State Industrial Extension Services of Federal research and development programs and to provide a contact point for such Services.

Establishes a three-year Industrial Extension Service Grant Program in the Department of Commerce to demonstrate methods of Federal assistance to States for the development of State Industrial Extension Services designed to help business enhance competitiveness through the application of the latest science and technology. Limits participants to not more than 15 States, with preference given on the basis of need and regional distribution. Makes grants available for FY 1988 through 1990. Requires that such funds be used to expand the number of businesses served or the quality of services provided. Requires that participating States provide at least 20 percent of the costs of such Program.

Authorizes States to provide services directly or through other State agencies or through universities or nonprofit organizations. Permits the charging of fees. Requires such States to report annually to the Secretary. Requires the Secretary to report to the Congress at the end of FY 1990 on the operation of the Program.

Authorizes appropriations for FY 1988 through 1990.