NOTICE TO LOCAL AGENCIES AND A&E CONSULTING FIRMS WITH FEDERAL AID HIGHWAY FUNDED PROJECTS
Beginning in July 1, 2013, the Federal Highway Administration (FHWA) initiated a Safe Harbor Cost Rate Test and Evaluation program for Architectural and Engineering (A&E) consulting firms involved in federal-aid highway funded projects in 12 designated states, including California. The FHWA established an indirect cost rate of 110%, which is below the industry average, for newly established, small, or disadvantaged A&E firms.
The initial test and evaluation period has been extended indefinitely until rescinded by FHWA.
The Safe Harbor program provides a framework for A&E consulting firms to establish a cost history for the eventual development of an indirect cost rate compliant with Title 48 Code of Federal Regulation Section 31.
- Remove a financial management barrier inhibiting new, small, or disadvantaged but qualified architectural and engineering consulting firms from entering the local agency administered, Federally-funded engineering services market;
- Provide a framework for these consulting firms to establish a cost history for the eventual development of an indirect cost rate for the firm in accordance with the Federal Cost Principles; and
- Enhance State DOT oversight of consulting firm compliance with the Federal Cost Principles by allowing limited State DOT audit resources to shift to higher risk firms and contracts under a risk-based approach.
For more information regarding the program and procedures, please review Caltrans Division of Local assistance Office Bulletin 13-07R. All Office Bulletins and attachments can be found on the Local Assistance Office Bulletin website.
POINTS OF CONTACT: If you have any questions, please contact your District Local Assistance Engineer.