Safe Harbor Indirect Cost Rate

The federal Safe Harbor program helps remove financial barriers that may otherwise prevent new, small, and disadvantaged architectural and engineering (A&E) consulting firms from entering the engineering services market federally funded under contracts with state Departments of Transportation.

The Safe Harbor Indirect Cost Rate option is 120% of direct labor with a field rate, when applicable, of 90% of direct labor. Use of the Safe Harbor rates is optional to the firm, and will not be subject to audit. Although the Safe Harbor rate is not auditable, the WSDOT or local agency agreement is still subject to audit based on the terms and conditions of the respective agreement.

Who qualifies for the Safe Harbor rate

• A/E firms that have not had a FAR-compliant indirect cost rate.
• This typically applies to new or small firms or those new to government contracts but is not exclusive to such firms.
• A/E firms that agree to the “Pathway to Compliance”.

When the Safe Harbor rate may apply

• Primes and sub-consultants, for use on WSDOT and local agency consulting agreements
• The Safe Harbor rate may be applied to new agreements and new task orders
• The WSDOT Internal Audit Office will be responsible for determining whether a firm is eligible to use the safe harbor rates

Steps to join the Safe Harbor program

Safe Harbor document checklist (PDF 355KB)

• Complete the Timekeeping Training and provide the training certificate to WSDOT Audit.
• Read the Pathway to Compliance (DOCX 30KB) to ensure your firm can eventually meet the requirements to provide a FAR-compliant Indirect Cost Rate. As part of the Pathway to Compliance, firms entering the Safe Harbor Program agree to implement an accounting system capable of accumulating and tracking direct/indirect labor and other costs by contract, segregating indirect costs, and removing unallowable costs. We have also developed a Safe Harbor program timeline (PDF 492KB) that outlines the typical milestones a firm may encounter.

After deciding to join the Safe Harbor program, please submit the following completed documents to the WSDOT Internal Audit Office at lamin.ceesay@wsdot.wa.gov: 

• Consultant Information Sheet 
• Safe Harbor Indirect Cost Rate Certification form (DOCX 18KB)
• Timekeeping and Labor Charging Checklist 
• Timekeeping Training Certificate

If available, please also submit (Optional):

• Financial Statements (Profit and Loss/Income Statement and Balance Sheet)
• Employee payroll register and/or proof of draws (depending on business structure)
• Representative sampling of timesheets
• Written timekeeping policy

Please contact the WSDOT Internal Audit Office, at 360-705-7799 or 360-705-7003 to determine what you should provide for the following:

• Representative sampling of timesheets
• Employee payroll register and/or proof of draws (depending on business structure)

To facilitate the process, please schedule a meeting with the WSDOT Internal Audit Office.

Frequently asked questions (FAQ)

If you have any questions about the Safe Harbor program that this page doesn’t answer, please let us know by sending an email to  lamin.ceesay@wsdot.wa.gov.

How does the Safe Harbor program benefit me and my firm?

• Immediate, approved ICR so your firm is ready to work as a prime or sub-consultant on WSDOT and Local Agency agreements.
• The rate may be applied to new or existing agreements.
• Allows your firm time to meet federal timekeeping and accounting requirements.
• The Safe Harbor rate will not be audited.

What happens once I’m in the program?

Your firm will be able to use the Safe Harbor rate when submitting your qualifications for WSDOT and/or Local Agency consulting agreements.

How long must I use the Safe Harbor Indirect Cost Rates?

Firms can submit for an indirect cost rate review once they have FAR compliant financial records covering a full fiscal year.  While Safe Harbor approval letters give firms three years to develop an indirect cost rate, they don’t have to wait the three years to submit for an indirect cost rate review. 

How do I graduate from the program?

Please see the Indirect Cost Rate review process page for details on what to submit for an indirect cost rate review.  CPA audits are conditionally required, depending on contractual agreements.  Firms with more than $1M in authorized work with WSDOT are encouraged to review their agreement terms and conditions.