Safe Harbor Indirect Cost Rate Test Program
FHWA Pilot Program - Washington State Selected to Participate
WSDOT has been chosen as one of the ten states across the nation to test the “Safe Harbor” indirect cost rate. Safe Harbor is a pilot program that is intended to remove a potential, initial financial barrier that may otherwise prevent or inhibit new, small, and disadvantaged architectural and engineering (A/E) consulting firms from entering the State-administered, Federally-funded engineering services market.
Many new and/or small firms do not meet Federal grant financial accounting requirements that are required to work on federal fund projects (49 CFR 18.22(b) and 48 CFR part 31). Safe Harbor provides new and/or small firms with an indirect cost rate that is to be used in the billing rates.
February 2015 - Safe Harbor Updates
April 2014 - Safe Harbor Updates
September 2013 - Safe Harbor Updates
The Safe Harbor Pilot program is being called the “Path to Compliance”. Use of the safe harbor rate will allow a firm time to develop an indirect cost rate in accordance with the Federal Cost Principles based on the actual cost of the firm.
The safe harbor test period is July 1, 2013, through June 30, 2016. The program will be evaluated each year.
At the end of the three year program, a firm that is approved to use the Safe Harbor rate should be able to meet all the steps listed on the Pathway to Compliance (docx, 36kb) document and provide a FAR-compliant Indirect Cost Rate.
Prior to admission in the Safe Harbor Pilot Program, a firm must be able to meet the timekeeping requirements described in the Pathway to Compliance document, and must sign the Certification of Safe Harbor Indirect Cost Rate (docx, 20kb) form before being provided with a Safe Harbor rate letter.
The Safe Harbor indirect cost rate option is 110%. Use of this rate is optional to the firm, and this rate will not be subject to audit.
Who can qualify to use this Safe Harbor rate?
- The safe harbor rate may be applied new agreements, or new task orders.
- The safe harbor rate may be used by both primes and sub-consultants.
- The safe harbor rate is available for Local Program agreements.
- If your firm has had a FAR compliant Indirect Cost Rate in the past, you would not be permitted to use the safe harbor rate.
- If your firm has "certified" your accounting system and/or timekeeping system by signing the CSO form or an hourly rate statement, you would not be eligible for the safe harbor program. We have worked closely with our FHWA Division Office for a ruling on this matter, and they indicated that such a certification would make your firm ineligible for Safe Harbor.
- Consulting firms that use the safe harbor rate will still be required to have an accounting system capable of accumulating and tracking direct/indirect labor and other direct costs by contract, segregating indirect costs, and removing unallowable costs.
- The safe harbor rate is not intended for field-based agreements. Safe Harbor would be a choice for eligible firms, of any size. Each eligible firm will have the choice of using the safe harbor rate of 110%, or providing a FAR compliant indirect cost rate.
- The WSDOT Internal Audit Office will be responsible for determining whether a firm is eligible to use the Safe Harbor rate.
Please check back on this website for further updates.