Safe Harbor Indirect Cost Rate

Firms new to the Indirect Cost Rate (IDR) process may qualify for the Safe Harbor program.

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 110% of direct labor with a field rate, when applicable, of 80% of direct labor. Use of Safe Harbor rate 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

  • New and/or small A/E firms that have not had a Federal Acquisition Regulation (FAR) compliant indirect cost rate in the past
  • Firms that are new to working with the government

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 rate

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 ElterJ@wsdot.wa.gov:

Safe Harbor Indirect Cost Rate Certification form (DOCX 18KB)

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.

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